Bruce Berkowitz (Trades, Portfolio) increased his shareholding of Sears Holdings Corp. after announcing a more active role in the company as its stock price slipped 39% this year in its third under leadership of CEO and investor Eddie Lampert.
According to insider data, Berkowitz reported Dec. 29 purchasing 390,100 additional shares of the company and selling 51,200, giving him a total of 27,835,448 shares, amounting to a 26% stake. The transactions took place between Dec. 24 and Dec. 29 at prices ranging from $20.81 to $21.74 per share. Sears shares traded around $20.15 Thursday afternoon, near a 10-year low, after a 0.89% decline since the start of the trading day.
Berkowitz mentioned Sears in his New Year’s letter he released amid his purchasing on Dec. 27:
“I don't want to belabor the point, but we believe successful investing requires seeing facts and consequences far ahead of the crowd,” Berkowitz wrote.
“Warren Buffett (Trades, Portfolio) may yet again be the first to affirm this with his recent purchase of Seritage Growth Properties (NYSE:SRG) before this REIT redevelops to obtain market-based rents. And, what is true of Seritage is true of former parent, Sears (NASDAQ:SHLD), which holds more than three times as much low-risk real estate and other assets.”
In an activist filing rare for the Fairholme mutual fund investor dated Dec. 17, Berkowitz also said he would “be in contact” with members of Sears’ board and management “regarding alternatives that the issuer could employ to increase shareholder value” and his “views on the long-term prospects” of the company.
Hedge fund manager and retail investor Eddie Lampert has struggled to execute his plan to turn around the retailer since taking over in 2013. Lampert has undertaken to transform Sears into an asset-light company more comparable to Facebook (FB, Financial), Alibaba (BABA, Financial) and Google (GOOG, Financial). He also wanted to change its culture from a store-first to customer-first model more in line with companies founded in the last decade, he said in his 2015 shareholder meeting.
The process led to some missteps over the past five years resulting in programs and technology “people weren’t ready or equipped to use,” he said.
In the third quarter Sears revenues declined to $5.8 billion from $7.2 billion in the corresponding quarter last year, and net loss of $454 million compared to $548 million. Cash of $294 million remained on its balance sheet, increased from $250 million at Jan. 31, with long-term debt of $2.2 billion, decreased from $3.2 billion.
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