Eddie Lampert raised approximately $75 million selling stocks from his hedge fund’s portfolio in the third quarter. It is unknown whether any of the proceeds went toward a $300 loan he made to his struggling retailer Sears Holdings (SHLD, Financial) in September, but he also spent nothing on new investments or increases to existing positions over the period.
Since taking over as CEO in 2013, Lampert has made several loans to the company he has described in his blog as “a membership-focused, integrated retailer in the process of transforming from a traditional retail company,” since its creation in 2005 through the combining of Sears and Kmart. Sears has seen a 7.9% annual rate of revenue decline in the past five years and has not produced a profit since 2012.
“We are working to restore the company to profitability,” Lampert said in October. “Our significant asset base gives us the wherewithal to fund our business, but we don’t intend to use our asset value to support losses.”
Lampert founded ESL Investments in 1988, where he relies on value-driven, bottom-up analysis of potential investments to find good companies with strong fundamentals that trade at attractive prices.
In the third quarter, he sold out of Seagate Technology PLC (STX, Financial) and reduced his holdings of IBM Corp. (IBM, Financial), Gap Inc. (GPS, Financial) and Fossil Group Inc. (FOSL).
Seagate Technology PLC (STX, Financial)
Lampert sold his entire stake of 484,622 shares of Seagate Technologies, which he acquired in the previous month. He made an approximate gain of 34% on the position.
Seagate Technology makes electronic data storage and hard disk drives. It has a market cap of $11.27 billion; its shares closed Wednesday around $38.27 with a P/E ratio of 30.37 and P/S ratio of 1.03. The trailing 12-month dividend yield of Seagate Technology stocks is 6.59%. The forward dividend yield of Seagate Technology stocks is 6.54%. Seagate Technology had an annual average earnings growth of 3.8% over the past five years.
Lampert reduced his IBM position by 42.2%, or 249,268 shares, to 329,203 shares. He owned the position since the third quarter of 2015 and has an estimated gain of 5% since then.
IBM Corp. has a market cap of $151.46 billion; its shares closed Wednesday around $159.29 with a P/E ratio of 13.01 and P/S ratio of 1.91. The trailing 12-month dividend yield of IBM Corp. stocks is 3.46%. The forward dividend yield of IBM Corp stocks is 3.53%. IBM Corp. had an annual average earnings growth of 8.1% over the past 10 years. GuruFocus rated IBM Corp. the business predictability rank of 2-star.
Lampert reduced his Gap Inc. position by 25.5%, or 873,907 shares, to 2,554,908 shares. He started the position in the second quarter 2015 and has an estimated loss of 21% on the holding.
The retailer of apparel for men, women and children through a list of stores has a market cap of $12.11 billion; its shares closed Wednesday around $30.38 with a P/E ratio of 17.06 and P/S ratio of 0.78. The trailing 12-month dividend yield of Gap Inc. stocks is 3.04%. The forward dividend yield of Gap Inc. stocks is 3.08%. Gap Inc. had an annual average earnings growth of 10.10% over the past 10 years. GuruFocus rated Gap Inc. the business predictability rank of 4-star.
Fossil Group Inc. (FOSL)
Lampert reduced his Fossil Group position by 16.4%, or 31,922 shares, to 162,520 shares. He started the position in the previous quarter and has an estimated gain on the holding of 3%.
Fossil is a purveyor of fashion accessories such as watches, handbags and leather goods. Fossil Group has a market cap of $1.72 billion; its shares closed around $35.70 with a P/E ratio of 17.41 and P/S ratio of 0.57. Fossil Group had an annual average earnings growth of 21.30% over the past 10 years. GuruFocus rated Fossil Group Inc. the business predictability rank of 4-star.
Lampert left his largest positions unchanged, including AutoNation Inc. (AN), Sears Holdings Corp. (SHLD, Financial) and Lands’ End Inc. (LE).
See Eddie Lampert’s portfolio here.
