Lampert’s company ESL Investments has a portfolio of 11 stocks with a value of $3.8 billion and a quarter-over-quarter turnover of 8%. Lampert’s portfolio is heavily weighted in consumer cyclical at 94.6%. Both SHLD and Sears Hometown & Outlet Stores (NASDAQ:SHOS) are in ESL Investments’ portfolio.
Considered an investment savant and called “the best investor of his generation,” Edward Lampert formed Sears Holdings (SHLD) in 2005 by joining Sears and Kmart under one umbrella. Lampert told shareholders in his letter of Feb. 28, 2013, “We are rebuilding Sears Holdings' culture with an acute focus on creating 'wow' experiences for our Members and putting Members First.” In leading Sears forward, Lampert values creating and maintaining customer relationships via interacting versus just transacting.
In a major retail makeover, Lampert launched creative, new ecommerce platforms more relevant to today’s younger consumers and a social shopping environment. In his chairman’s letter, Lampert stated, "Sears Holdings made progress in 2012 improving the profitability of our business, but we know there's more work to be done in 2013…Our focus continues to be on our core customers, our Members, and finding ways to provide them value and convenience through Integrated Retail and our SHOP YOUR WAY Membership platform. We have invested significantly in our online ecommerce platforms, our Membership rewards program and the technology needed to support these initiatives."
As for Sears Holdings Corporation's health, GuruFocus performed a checkup and found the company has a low Piotroski F-Score of 2, which usually implies poor business operations. Also, the company’s gross margin has been in long-term decline; the average rate of decline per year is 1.7%. Other warning signs: Sears Holdings Corporation has issued new debt of $485 million over the past three years, revenue has declined over the past 12 months and Sears Holdings Corporation had operating loss over the past three years.
Modeling his investment style after Warren Buffett, Lampert is the founder of ESL Investments Inc., a private investment company, as well as the CEO of Sears Holdings Corporation (NASDAQ:SHLD). Since starting ESL Investments in 1988 at the age of 25, Lampert racked up a reputation and returns averaging 29% a year. On the Forbes list of 400 Richest Americans, Lampert is 68th. Fortune called the billionaire “the best investor of his generation.” Although Sears is his first retail CEO role, Lampert served as director for both AutoNation (AN) until 2007, and AutoZone (AZO) from 1999 through, during which time the company’s market price increased approximately 338%.
While Lampert hones the Sears’ operation with a mission to serve, delight and engage members while they shop their way, clearly he’s confident about investing in his own vision and the future of a company with some of the most recognized proprietary brands in retailing, such as Kenmore, Craftsman, Diehard and Land’s End.
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