A Form 4 filing reveals that Edward Lampert received 7,198 shares of Sears Holdings Corp (NASDAQ:SHLD) representing restricted stock granted under the company’s 2006 Stock Plan, as amended.
The current holding of Lampert and other entities including hedge fund ESL in Sears Holdings Corp (NASDAQ:SHLD) is 51.57 million shares, about 48.61% of the 106.10M shares outstanding in the retail chain. Lampert’s holding fell below the 50% threshold after he cut holdings in December.
Lampert cut holdings following redemption demands
Last December, the continued slide in the share price of Sears Holdings Corp (NASDAQ:SHLD) probably drove investors to withdraw funds from Lampert’s ESL Investments hedge fund. Eddie Lampert met the redemption demands by distributing Sears shares to the investors instead of paying out cash.
Philip Carret was an investor and founder of Pioneer Fund, one of the first mutual funds in the United States. Carret ran the mutual fund for 55 years, during which time an investment of $10,000 became $8 million. That suggests he achieved a compound annual return of nearly 13% for his investors. Q1 2021 hedge Read More
An analyst said at the time that the block of shares “could reduce the costs of shorting Sears if sold on the open market,” and could create further pressure on the stock.
Sears stock performance
According to FinViz.com, Sears Holdings Corp (NASDAQ:SHLD) has lost 26.32% over the last month and 30.69% YTD.
As per Nasdaq, as of January 15, short interest in Sears Holdings Corp (NASDAQ:SHLD) was 15.09M shares, which is about 19.55% of the float of 77.19M shares.
Sears forecasts Q4 loss
Last month the stock fell after the company forecast a loss in the fourth quarter and said holiday period sales had declined.
Last month the WSJ said online shopping had likely made a permanent dent in shopper traffic at physical retail stores. “A long-term change in shopper habits has reduced store traffic—perhaps permanently—and shifted pricing power away from malls and big-box retailers,” it said.
Retail real estate – two sides of that coin
Renowned investor Bruce Berkowitz has long been an ardent fan of the value of Sears Holdings Corp (NASDAQ:SHLD) real estate.
“Since the merger of Sears with Kmart, about 9 years ago, Sears has distributed over $66 of cash per share via buybacks and spin-offs and has paid down $27 per share of a pension liability that is no different, in our view, from debt,” Berkowitz says in his latest fund annual report. “Fairholme research estimates that the fair value of Sears’ net assets exceeds $150 per share. If our research is accurate, we expect Sears’ market price of $38 to increase to this value over time,” he adds.
The view on the flip side is that retail suffers from a surfeit of real estate supply.
“There is one billion square feet of vacant retail space in the United States, according to Urban Land magazine,” says an article in TheStreet. “While the stock prices of Sears, J.C. Penney Company, Inc. (NYSE:JCP), RadioShack Corporation (NYSE:RSH), The Bon-Ton Stores, Inc. (NASDAQ:BONT) are other retailers that are declining rapidly, the vacancy rate for retail space is decreasing very, very slowly. Sears presents a particularly egregious example that the retail real estate market market is not valuing as highly as its investors.”