Bruce Berkowitz (Trades, Portfolio), one of the primary investors in Sears Holdings (SHLD, Financial), which announced its intention to file for bankruptcy last week, has sold some 67.44% of his stake in the company, according to a filing released Friday.
Berkowitz, who once sat on the board of the ailing retailer, reported owning only 4,578,440 shares of the company, a position diminished from 14,061,947 shares he owned at last count on Aug. 28. The sale represents the largest decrease he has made in the position in at least the past nine years on record. At peak, his holding topped 28.9 million shares in the first quarter of 2017.
The investment has done some damage at Berkowitz’s firm, Fairholme Capital Management, with the investor saying in January that it “wrecked the funds’ performance.”
“Sears realized billions of dollars from asset sales, as we predicted, but I did not foresee the operating losses that have significantly reduced values,” Berkowitz wrote in a shareholder letter. “Getting the asset values largely correct, but missing the company’s inability to stop retailing losses, has been hugely frustrating and fatiguing for me to watch.”
Berkowitz’s latest filing is dated Oct. 15, the date Sears announced it had filed for Chapter 11 bankruptcy pursuing a turnaround in a competitive retail environment since 2009 under the watch of its hedge fund manager CEO, Eddie Lampert. Despite closing 142 unprofitable stores and selling more assets as part of its restructuring, the company said that it plans to stay in business and wants to use the bankruptcy to “accelerate its strategic transformation.”
Lampert discussed the failed turnaround in a New York Times profile published Sunday, in which he cited an inability to keep up with retail’s digital revolution and inability to raise enough money as principal inhibitors of success. Lampert told the paper, “I’m not fine with the outcome, but I’m fine with the effort.”
Investors still holding on to Sears lost even more on Monday, when the stock’s price tumbled 9.27% to 42 cents per share, against a 0.45% decline in the S&P 500. Sears has declined almost 88% year to date. At their highest, shares of the historic retailer traded above $130 in 2007.
Berkowitz has noted in shareholder letters that he has far less exposure to Sears in his three main funds than he did in years past. Of his remaining shares, 2.4 million are owned by the Fairholme Fund (Trades, Portfolio) and 373,898 are held in his Fairholme Allocation Fund.
As he has dialed back on Sears, Berkowitz started three fresh positions in the second quarter, buying AT&T (T, Financial), Spectrum Brands Holdings (SPB, Financial) and Vista Outdoor (VSTO, Financial).
See Bruce Berkowitz (Trades, Portfolio)'s portfolio here.
Read more here:Ă‚
Sears Is Now Under $1; What I Said About It Two Years Ago in My Book “Invest Like a Guru”
