Out Fox The $treet

In a surprising turn of events on Monday, Sears Holdings Corporation (NASDAQ: SHLD ) investors completely ignored the surprising earnings guidance in favor of the news regarding the CEO leaving. The company reported that earnings would smash the analyst estimates of $0.86, but the market focused more on the replacement of the CEO due to family health issues. The stock plunged 6.4% on Tuesday as investors became concerned that more » Disclosure: Long SHLD. Please review the disclaimer page for more details. 

This is the third part of a series on Sears Holdings (SHLD) with the focus of this part on the pending spin-offs of the Sears Hometown and Outlet Stores (SHOS) and Sears Canada (SCC.TO) . One of the opportunities of creating value for the Sears shareholders is to unload some of the assets buried on the balance sheet. How many investors that owned the stock last year even knew about the Orchard Supply Hardware Stores (OSH) stores or these spin-off properties? All of these assets have been buried and under appreciated for a long time. As mentioned, this is the third part of a series. Previously, the first part focused on the highlights of Q2 earnings while the second part focused on the case study prepared by Bruce Berkowitz and Fairholme Funds. Read the full article at Seeking Alpha. Disclosure: Long SHLD. Please review the disclaimer page for more details. 

With some 30% of the float short, it shouldn't be that shocking to see any hint of good news send Sears Holdings (SHLD) 20% higher as it did today.  With Q4'11 earnings, Sears announced the sale of 11 prime mall locations for $270M. Combined with a rights offering and spin-off of the Hometown and outlet for $400-500M, Sears has plans to quickly raise liquidity by $1B. So while all the market experts focus on yet again disappointing earnings, Sears squashed the shorts that continue to fail to realize the substantial assets the company controls. For whatever reason, investors continue to forget that the valuation of a company should be the net assets plus the discounted cash flows or earnings. In the case of Sears, most people agree that future cash flows are a big question market, but most of those people continue to ignore the vast unencumbered real estate holdings and valuable brands. The reason for the huge jump today is that the add liquidity and especially the ability...

Somebody keeps forgetting to tell investors/traders that earnings reports hardly matter at Sears Holdings (SHLD). At least the earnings per share or loss in this case. SHLD is all about cash flow, real estate, and share buybacks. Over time, Eddie Lampert will continue to shrink the shares outstanding to the point where he controls all of the company. Currently RBS Partners (Lampert) and Fairholme Capital Management (Berkowitz) control roughly 70% of the outstanding shares in SHLD. The lower the share price the easier it will be for him to buy shares and dramatically increase his ownership control. Highlights from Q2 report : Significantly improved profitability in the Kmart format as gross margin increased 230 basis points over the second quarter last year; Adjusted loss per diluted share for the second quarter of $0.19 in 2010 and $0.17 in 2009, and adjusted EBITDA for the quarter of $254 million in 2010 and $268 million in 2009. Share Repurchase During the 13- and 26- week...

Sears Holdings (SHLD) remains one of the most debated stocks in the universe of investing. Shorts claim that the PE is too high. Longs (like Stone Fox Capital) claim that the assets (those on and off the balance sheet) are so valuable that the stock is very cheap. Who is right? In situations like this its key to research the involvement of bigger investors. Would you short a stock that Buffet is buying or buy a stock that Buffett is selling? The main investors in SHLD are Eddie Lampert whose ESL hedge fund via RBS Partners owns a whopping 57% or 66M shares and Bruce Berkowitz's Fairholme Funds that owns 13% or 15M shares. It is the 2nd largest holding in his fund. The fund has done so well that Berkowitz was just named the Morningstar Domestic Fund Manager of the Year. Both are guys that investors should be happy to invest along side. Ironically though SHLD has a ton of shorts. In the below interview on CNBC today, Bruce was gleaming from ear to ear on his SHLD investment. Today th...