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CEO’s Plan to Save Sears Would Hand His Hedge Fund $1B
- zelon88 8y agoApparently I can't read the article in my RSS reader because it's a TOS violation for Bloomberg. That's ok though. If it's a TOS violation to read the article without giving my info to their 23 trackers and 6 intrusive advertisements I'm all set anyway.
- totablebanjo 8y agoWhat RSS reader do you use?
- greglindahl 8y agoI've been getting that apparently due to the VPN that I use -- if I temporarily switch it off, I have no problem reading their articles despite my adblocker.
- samstave 8y agoWhat VPN do you use? Are you going through VPN as a matter-of-coarse to browse the web?
- greglindahl 8y agoI happen to be using SurfEasy VPN, not that I recommend them other than that they're cheap, and this is on a phone where I keep it on as much as possible. So far only Bloomberg's website and one app are allergic to the VPN.
- toomuchtodo 8y agoIf your RSS reader is polling the content from AWS or other known server/cloud IP blocks, that triggers their TOS violation notice. Happens to Pocket for me all the time.
- throwaway456321 8y agoNo conflict of interest there!
- bitL 8y agoWho cares about such pesky things nowadays? "Morality is for losers" is the current Zeitgeist. Phew
- throwaway456321 8y agoI live in an affluent area and the Sears by us closed. If Sears can't survive there, it's done. I feel bad for the people who worked there. Whenever I went in, they were always helpful. Now they are looking for something else.
- Aloha 8y agoThe CEO of Sears is why Sears is going out of business, near as I can tell - he's purposefully running the company into the ground.
- aczerepinski 8y agoI doubt it's purposeful - more just that retail in the Amazon era is difficult and he has demonstrated no particular talent or qualifications for running such a business. He used to get talked up as the next Warren Buffett, but I don't really think his skills as an investor have held up to scrutiny either.
- goshab 8y agoI thought it was widely known he was doing some longterm liquidation of Sears’ assets, specifically their real estate and top brands.
- aczerepinski 8y agoI think the original plan was to use Sears to acquire more top brands, not sell them off. He made a failed bid for Restoration Hardware early on, and talked about building a portfolio of strong all-American brands. The liquidation strategy was a reaction to his plan failing as far as I'm aware. In the early years all the talk was on building a bigger conglomerate, possibly using Sears "super valuable" real estate to fuel it. https://www.bloomberg.com/news/articles/2004-11-21/the-next-warren-buffett https://www.bloomberg.com/news/articles/2004-11-21/the-next-...
- fhood 8y ago1. Invest in online retail services 2. Invest in nostalgia brands like Craftsman, that can't be purchased on amazon, and come with a built in consumer base. 3. Use previously considerable resources to position yourself as the best place to shop for X product, and make sure that several brands of X product are only available through you. 4. Still probably fail, but at least it looks like you tried.
- nemothekid 8y agoThere's a great reddit post that absolutely goes into Lampert and the mismangement of Sears. https://np.reddit.com/r/investing/comments/5sqsed/sears_is_crumbling_fun_fact_since_2007_shld_is/ddhe6ci/ https://np.reddit.com/r/investing/comments/5sqsed/sears_is_c...
- TuringNYC 8y agoAnyone know what (if any) haircut the pension-recipients would need to take if he actually runs the company into the ground? Does the Pension Benefit Guaranty Corporation (aka PBGC aka USA aks "us") have to pay pensioners 100 cents on the dollar? Does the defined benefits plan get turned into a defined-contribution plan as of current value? I feel bad for the employees of Sears...but i'm also selfishly worried that the US Government ("we") ends up having to pay out absurd pension schemes with absurd 7% annual return assumptions.
- pkaye 8y agoI think the maximum is around $5k/month. And best as I understand, the pensions funds as charged a fee to fund the guarantee. Meanwhile us on 401k investments has no such guarantees and republicans are trying to gut the social security system which we put sizable money into.
- Retric 8y ago7% annual return is high, but not really absurd when including dividends, if managed for the long term and accepting some risk.
- jakelarkin 8y agoits little-stated due to the massive fiscal and political implications but there's a belief among some of the better investment professionals out there that the past decade of 1) low baseline interest rates 2) large run up in stock multiples, 3) proliferation of index funds ... will depress long-run stock total returns into the 4-6% range for many decades.
- lotsofpulp 8y agoIt is absurd, and that's why the IFRS and US government forced corporation pension funds to use discount rates that match high grade corporate bond yield curves (which are no where near 7%). See Pension Protection Act of 2006: https://www.treasury.gov/resource-center/economic-policy/corp-bond-yield/Documents/hqm_pres.pdf https://www.treasury.gov/resource-center/economic-policy/cor...
- cepth 8y agoEddie Lampert's mismanagement of Sears is the reducto ad absurdum of financial "wizards" attempting to succeed as business operators. I will never forget reading this article (from 2011): https://www.wsj.com/articles/SB10001424052970204517204577042442598865710 https://www.wsj.com/articles/SB10001424052970204517204577042.... 'While retail experts estimate that store chains traditionally spend $6 to $8 per square foot on annual maintenance, Sears is spending a fraction of that amount, said Matthew McGinley, managing director of International Strategy & Investment Group, an investor research firm. "With roughly 250 million square feet domestically, [Sears] is spending about $1.90 a foot, which is a quarter of what you need to maintain share and keep it as an acceptable place to shop," Mr. McGinley said.' --- Nor will I forget reading about his management philosophy where different Sears departments have to compete for money in the budget. Money to advertise, to purchase inventory, etc. (https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles https://www.bloomberg.com/news/articles/2013-07-11/at-sears-...) To the average "person on the street", it may be patently obvious that when your stores are filthy and understaffed, no one will want to shop there. To Eddie Lampert, the way to juice EBITDA for a few years is to slash that maintenance money. Pour one out for the death of multiple iconic American brands (Craftsman, Kenmore, and eventually Sears itself). Don't shed a tear for Lampert, since he's set himself up for a "heads, investors, customers, and employees lose" and "tails, I win" situation.
- bluedino 8y agoWho's to say if someone else wasn't in charge, they would already be out of business?
- ocdtrekkie 8y agoSounds like he's trying to get his money out from a business he knows isn't being saved. With a share price that low, they should announce a pivot to cryptocurrency and drop an ICO, lol.
- cde-v 8y agoEat the rich.
- marnett 8y agothey taste like chicken!
- mywittyname 8y agoMore like veal.
- mrguyorama 8y agoI think my favorite part of the whole "Sears flushed itself down the toilet" story is that crappy management can play the "We got outplayed by Amazon" card to shrug off responsibility, meaning no stingy management at other companies and corporations will learn from this mistake
- Apocryphon 8y agoI couldn’t help but think of Barnes and Noble as a case of bad management using Amazon as their excuse to fail.
- debacle 8y agoOne could walk into nearly any Barnes and Noble and see that that is far from the case.
- Apocryphon 8y agoSpecifically this story: http://audreyii-fic.tumblr.com/post/170886347853/the-entirely-unnecessary-demise-of-barnes-noble http://audreyii-fic.tumblr.com/post/170886347853/the-entirel... https://news.ycombinator.com/item?id=16389342 https://news.ycombinator.com/item?id=16389342
- acjohnson55 8y agoDaaamn. How do you prevent monopoly when the underdogs are utterly destroying themselves?
- kevin_b_er 8y agoStandard practice. The retailer's assets are converted to profit for some financial firm and the retailer dies. Hedge funds gain enough control to saddle them with debt, then cash out. These major retailers failing? They're engineered to fail by the parasite that is the financial industry that vacuums up money into its control. It is no surprise that the CEO, who owns the hedge fund that will give him a pretty penny of a 1 Billion with B cashout, wants to axe the company his somehow CEO of, for his own profit. It would not surprise me if the hedge fund got to install him though owning enough of the company. This is nothing but the modern reincarnation of Gordon Gekko. Greed is good. Only they've evolved their methods of extracting and consolidating wealth from the public since then.
- Drdrdrq 8y agoIs it legal or can other shareholders sue him and the fund?
- vkou 8y agoYou can sue anyone for anything, but generally speaking, mismanaging a company to screw minority shareholders is grounds for a lawsuit. Sadly, these kinds of cases are never a sure thing. They can be settled for pennies on the dollar.
- empath75 8y agoSame bullshit happened to Toys R Us. Leveraged buyouts should be illegal.
- rohitb91 8y agoNot to mention no one paid for the crimes of 2008.
- hinkley 8y agoIn the 80's this was called Corporate Raiding. There's even a movie with a young(ish) Danny Devito called Other People's Money. The execution has changed (pun intended), but it's an old trick.
- protomyth 8y agoIt is just so sad that a company that was built on the catalog business couldn't transition into putting their catalog on the web. The Xmas catalog was an event each year for a lot of kids.
- blairanderson 8y agoamp article has less tracking junk on it https://www.bloomberg.com/amp/news/articles/2018-09-27/lampert-s-sears-plan-would-hand-lampert-s-hedge-fund-1-billion https://www.bloomberg.com/amp/news/articles/2018-09-27/lampe...
- bluev 8y agoSears needs to go back to the drawing board or just hit on crazy ideas, it's a perfect time to revitalize their now historic, prefabricated homes.
- phlakaton 8y agoIf I'm reading the article correctly, Lampert's fund has put $2.5B into Sears, so the kickback would mean they "only" lose $1.5B instead. That's a very different story than how I thought the title read, which was: "CEO's hedge fund walks away $1B richer." I hope investors are taking ESL's management of Sears into account when deciding if it's a hedge fund they will continue to support. There's risk, and then there's incompetence...
- nickelcitymario 8y agoThe really big irony in all of this is that, if I'm not mistaken, it was the old Sears Roebuck catalogs that used to say something like "it's folly to purchase items on credit". Then the next generation took advantage of consumer folly, making financing a core part of the business. And now debt is killing this originally-anti-debt company.
- rohitb91 8y agoI love financial irony
- markbnj 8y agoUsed to do business with Sears years ago and visited the Hoffman Estates headquarters. I'll never forget the impression of truly massive bureaucracy that the place conveyed. I'll also never forget how they dismantled their whole catalog operation just a couple of years before internet shopping took off.
- mherdeg 8y agoI was really hoping to see some follow-up from this amazing Reddit post from 2017:https://www.reddit.com/r/legaladvice/comments/5m90gv/im_17_2_years_ago_i_inherited_100k_from_my/ https://www.reddit.com/r/legaladvice/comments/5m90gv/im_17_2... The poster inherited about $100,000 and their parent, controlling the money, invested it in SHLD in March 2015 (circa $40/share). I've always wondered whether that person managed to get the money out (in 2017 at $8/share) or whether it's still there now (at $1/share).
- anoncoward111 8y agoGood Lord. If there was ever a better way to say "cash is king". I would be dejected.
- kevmo 8y agoInvoluntary bankruptcy is pretty rare in the USA, but Sears sounds like a good candidate for it. Kmart and Sears are obviously cruising towards Chapter 7 or 11. If I were a sizable creditor, I would rather get the company into bankruptcy court early, before the CEO was able to pillage all the cash holdings. (Source: I'm a former bankruptcy lawyer)
- anoncoward111 8y agoDoes he just straight up bonus it to himself in this scenario or does he like funnel Sears contracts (for example like employee toilet paper or something) to businesses that he owns 100% privately, like "EDDIE'S PAYPA FUHFILFMENT CO. INC."?
- brogrammernot 8y agoCan’t go into too much detail but had a meeting with some of their top tech peeps (title wise) and it was really, really clear they have no clue how to run an effective eCommerce business. It was also incredibly hard for me to sit there and watch a company I fondly remembered visiting with my father to pick up some tools (back when it was run much, much better) have such minimal vision for their eCommerce + little leverage at the table. Feels really bad for the employees.
- anoncoward111 8y agoI don't want to turn this into a "laissez-faire capitalism vs state-planned economy" debate, but I'm noticing this is the rule rather than the exception. With so many incredibly gifted and hungry tech rockstars just searching for just one lucky break out there, how on Earth is it that all these clueless individuals continuously get to run major tech initiatives at major companies?
- toomuchtodo 8y agoIt’s about who you know, not what you know.
- anoncoward111 8y agoTo the tune of countless billions in wealth destroyed as a result.
- deleted 8y ago[deleted]
- brogrammernot 8y agoWell, honestly I’m not entirely sure but overall the feeling was they had impressive resumes (big tech backgrounds) but really just seemed like they skated along as I just curiously asked what they did/worked on and it was really like a mile wide, inch deep responses. I dunno, it was also really weird to have tech people show up to a large tech company’s office in full suits during the summer. Felt really out of touch honestly.