Author Topic: SHLDQ - Sears Holdings Corp  (Read 2843476 times)

longinvestor

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Re: SHLDQ - Sears Holdings Corp
« Reply #9030 on: October 18, 2017, 05:55:03 AM »
This is going to sound quite contrary in light of all the speculation regarding Bruce's departure, and the market reaction, but I think it's actually bullish for SHLD. I don't interpret it as FAIRX bailing on the investment. Rather, Bruce provided his input to the board, the input has been acted upon as part of the restructuring, and he sees no reason to continue on the board. The main test will be whether SHLD can return to profitability as a result of the restructuring. Bruce stated that no one will believe SHLD is capable of this until they actually see it. Time will tell.

Seems like he is telegraphing that he has been successful re: his concerns

http://www.fairholmefundsinc.com/Bulletin/SHLDstatement20171017.pdf


"... I believe that I have achieved that objective, and was pleased to have the opportunity to assist in developing the company’s strategic restructuring program, which was announced earlier this year."




 

You guys are correct.

You guys really think that in this retail environment, and at this place in time, somehow Berkowitz and Lampert have fixed Sears and stemmed its burn rate?  You guys know that Sears Canada just went under, right?  Is there anything that springs to mind on why or how Sears U.S. is going to incur a different fate? 

This thing has been a black hole for well over a decade now.  There is no end in sight where it doesn't continue sucking all of the money in the universe!  Cheers!
+1 The good investors, Lynch as an example, get around to the companies they own, stay in hotels, buy in stores etc. There are  posters here who apparently don't do anything like that. If you had shopped Sears over the past decade or longer, you would know everything you needed to know to take your money far away. Keeping your eyes and ears open come before reading arcane financial documents.

Fixing the unfixable, that's what Sears looked like.


Liberty

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Re: SHLDQ - Sears Holdings Corp
« Reply #9031 on: October 18, 2017, 06:06:30 AM »
Whether Sears is fixed or not won't be divined by doing exegesis on Lampert and Berkowitz's comments, that's pointless. Might as well ask the barber if you need a haircut.

Go visit a few Sears stores, go visit their website, ask people you know if they shop there, shop there yourself and be honest about the experience, etc. Then look at the financials and the competition, what kind of operational levere/deleverage they're experiencing, at what rate the ice cube is melting, etc.

That'll tell you a lot more.
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BeerBBQ

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Re: SHLDQ - Sears Holdings Corp
« Reply #9032 on: October 18, 2017, 07:59:28 AM »
A little exegesis (as futile as it may be) for why Bruce resigned from board:

Berkowitz believes that SHLD’s “vast asset base” has “enormous value” and that it is “imperative to promptly return to profitability” in order to fully capture the remaining value. He says he assisted with the company’s strategic restructuring program which obviously is related to his concerns of not moving quickly enough (after 10 years, better late than never) to monetize the assets that are left and being too slow on shutting down unprofitable stores.

The first priority of these two objectives appears to be more aggressively shutting down the unprofitable stores because he said that he told the board prior to joining “that eliminating the cash burn will do more to optimize the value of Sears’ assets than any other action…”.

Also, in his June conference call he said “There’s no doubt, returning to profitability is the most important action because when you do that, time becomes the company’s friend and the returns should increase.  So time becomes very positive when you return to profitability.  You’re also going to get a better look at the assets of the company once the concerns about lack of profitability are extinguished.  People will be able to focus on the assets of the company and understand what’s truly there.  And of course, I believe the value of assets that are transacted will improve. But clearly, extinguishing the loss will put the company in a better negotiating position for its asset base.  In fact, it’ll put it in a better negotiating position with vendors and all others.  So returning to profitability is key and the time is now.”

The pace of store closures has clearly accelerated this year.  While the company has still shown net losses in the first two quarters of this year, those losses are half the amounts shown in previous years.  I’m guessing that the next quarter report will show even more improvement on that front.  Taking him at his word that he achieved his objective seems to indicate that he was successful in communicating his thoughts on the proper course forward and those thoughts are encompassed in the restructuring program which is geared towards eliminating the cash burn.
 
Thus, his departure from the board is probably not because he is throwing in the towel and more likely due to his satisfaction that the path forward is in line with his thoughts and recommendations.

So do I think SHLD is fixed? No. Do I think there is an urgency today that has been lacking for the past decade to eliminate the cash burn? Yes.     

Eye4Valu

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Re: SHLDQ - Sears Holdings Corp
« Reply #9033 on: October 18, 2017, 10:50:11 AM »
In all due respect, why would we not take all comments posted on this board with a grain of salt as well? Do you all claim to know more about Sears than Eddie and Bruce? I strongly suspect you probably don't, and neither do I. Can you all prove that the cash burn hasn't been voluntary? Will no retailer survive the carnage except Amazon, with its excessive valuation? I think the quote from Horace's Ars Poetica may be applicable here. "Many shall be restored that are now fallen, and many shall fall that are now in honor."

jmp8822

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Re: SHLDQ - Sears Holdings Corp
« Reply #9034 on: October 18, 2017, 11:25:09 AM »
In all due respect, why would we not take all comments posted on this board with a grain of salt as well? Do you all claim to know more about Sears than Eddie and Bruce? I strongly suspect you probably don't, and neither do I. Can you all prove that the cash burn hasn't been voluntary? Will no retailer survive the carnage except Amazon, with its excessive valuation? I think the quote from Horace's Ars Poetica may be applicable here. "Many shall be restored that are now fallen, and many shall fall that are now in honor."

Do you own SHLD stock? How long have you owned it? Losses, realized or unrealized, are painful.  It can be difficult to know when to sell and when to arrive at the conclusion that there was a mistake.

BTShine

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Re: SHLDQ - Sears Holdings Corp
« Reply #9035 on: October 18, 2017, 11:53:19 AM »
In all due respect, why would we not take all comments posted on this board with a grain of salt as well? Do you all claim to know more about Sears than Eddie and Bruce? I strongly suspect you probably don't, and neither do I. Can you all prove that the cash burn hasn't been voluntary? Will no retailer survive the carnage except Amazon, with its excessive valuation? I think the quote from Horace's Ars Poetica may be applicable here. "Many shall be restored that are now fallen, and many shall fall that are now in honor."

Do you own SHLD stock? How long have you owned it? Losses, realized or unrealized, are painful.  It can be difficult to know when to sell and when to arrive at the conclusion that there was a mistake.

Good points made on this board over the last 24 hours.  Investing is a mentally challenging practice.  It is entirely possible SHLD goes to $0.  And it is entirely possible SHLD goes up from here.  I watched WTW go from $80 to $4 and now back to ~$50.  One could've made arguments for WTW stock going to $0 or $80 at all points along the way. 

Overall, I think the people on this board attempt to be open minded and fair to well thought our conclusions. 

randomep

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Re: SHLDQ - Sears Holdings Corp
« Reply #9036 on: October 18, 2017, 01:14:29 PM »

Good points made on this board over the last 24 hours.  Investing is a mentally challenging practice.


Investing isn't all that hard if you know of and use a too-hard pile......

TwoCitiesCapital

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Re: SHLDQ - Sears Holdings Corp
« Reply #9037 on: October 18, 2017, 02:11:52 PM »

Good points made on this board over the last 24 hours.  Investing is a mentally challenging practice.


Investing isn't all that hard if you know of and use a too-hard pile......

I disagree -

Even with much self confidence and a ton of data - watching something that you "know" is worth $15 and trading at $9 go to $7, and then $5, and then $3 over two years is enough to make anyone second guess themselves - particularly if you were adding and losing more $ the whole way down.

It recovered though - so I feel much better about it :)

benhacker

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Re: SHLDQ - Sears Holdings Corp
« Reply #9038 on: October 24, 2017, 09:27:18 AM »
From earlier, I said:

Quote
I think the debt is the bigger class here and you need to have a pretty strong feel for it if you are going to be playing the options / stock.

You have 3 (basically) publicly tradable classes.

'17 SRAC
'18 Secured HoldCo
'19 Unsecured HoldCo
And '28 - '43 SRAC

SRAC is rated above HoldCo debt, and Secured HoldCo is above SRAC.  All debt is 1 rating apart...

Long term SRAC trading at 40% of par, near term issues trading from 87-95% of par (through '19).

Given the above information, the market is saying *strenuously* that a filing won't happen soon (through '19).  If it did, you could create a crazy trade -- short front end debt and long long term debt which would experience extreme pricing convergence upon a filing.... amazingly, this trade would be massively positive carry as well.

I hear you on the puts and doing what makes sense and picking your spots; but given the capital structure pricing today it's a very very inefficient way (my opinion) to express your view which while common on this board appears to be very divergent from debt securities' market participants.

Clearly the pricing could be due to yield / liquidity, or just plain insanity... but I think it's worth Sears bears doing a lot of work on the debt if you think a filing is imminent.  I may short the '19's just to hedge out my much higher yield SRAC position (given SSRAP structure, that would be a seriously dirty hedge though).

Just some thoughts.  Good luck (actually, I take that back...)

Just to flash back.  The trade I proposed (long >'28 SRAC, short '19 HoldCo) has strongly converged.  SRAC up 10% (now at $45) and '19 HoldCo down ~30% (now at $60).  SHLD common unchanged basically so the way to play SHLD filing (which is more likely now) was not puts (at least in this reality).

Not picking on Walt who's view was clearly articulated, just thought it was an interesting follow up given the bizarre nature of the Sears discussions and business over time. :)

Ben Hacker
Beaverton, Oregon - USA

TwoCitiesCapital

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Re: SHLDQ - Sears Holdings Corp
« Reply #9039 on: October 24, 2017, 11:00:35 AM »
From earlier, I said:

Quote
I think the debt is the bigger class here and you need to have a pretty strong feel for it if you are going to be playing the options / stock.

You have 3 (basically) publicly tradable classes.

'17 SRAC
'18 Secured HoldCo
'19 Unsecured HoldCo
And '28 - '43 SRAC

SRAC is rated above HoldCo debt, and Secured HoldCo is above SRAC.  All debt is 1 rating apart...

Long term SRAC trading at 40% of par, near term issues trading from 87-95% of par (through '19).

Given the above information, the market is saying *strenuously* that a filing won't happen soon (through '19).  If it did, you could create a crazy trade -- short front end debt and long long term debt which would experience extreme pricing convergence upon a filing.... amazingly, this trade would be massively positive carry as well.

I hear you on the puts and doing what makes sense and picking your spots; but given the capital structure pricing today it's a very very inefficient way (my opinion) to express your view which while common on this board appears to be very divergent from debt securities' market participants.

Clearly the pricing could be due to yield / liquidity, or just plain insanity... but I think it's worth Sears bears doing a lot of work on the debt if you think a filing is imminent.  I may short the '19's just to hedge out my much higher yield SRAC position (given SSRAP structure, that would be a seriously dirty hedge though).

Just some thoughts.  Good luck (actually, I take that back...)

Just to flash back.  The trade I proposed (long >'28 SRAC, short '19 HoldCo) has strongly converged.  SRAC up 10% (now at $45) and '19 HoldCo down ~30% (now at $60).  SHLD common unchanged basically so the way to play SHLD filing (which is more likely now) was not puts (at least in this reality).

Not picking on Walt who's view was clearly articulated, just thought it was an interesting follow up given the bizarre nature of the Sears discussions and business over time. :)

Or it was to be selling them ;)

« Last Edit: October 24, 2017, 12:47:17 PM by TwoCitiesCapital »