Wednesday, February 22, 2012

Hell Freezes Over: Eddie Needs Wall Street

 There it is, plain as day, on my conference call alerts calendar, but I don’t quite believe it:
 Q4 Sears Holdings Corp Earnings Conference Call            2/23/12            8:00 a.m.
 There’s a phone number and a password, so it’s gotta be real.  If it is real, and it does take place, it’ll be the first time Sears has deigned to hold an earnings conference call during the Lampert years, as far as I can recall.
 Hell, it appears, has frozen over.
What might it mean?  Why now?  Well, let’s think about this once-in-a-career announcement for a second.
For starters, the fact that Sears is holding a conference call means the news is probably not very good.  After all, good news takes care of itself, but bad news needs explaining.
Still, that’s nothing the market doesn’t already anticipate—the bid/ask on the Sears Acceptance Corp credit default swaps is a whopping 1475/1583 on my Bloomberg at the moment.
More interesting, perhaps, is that the call is scheduled for 8 a.m. E.S. T.
That’s well before the market opens in New York, which means the news is really probably not good at all, since companies with bad news generally don’t hold calls during trading hours, since they don’t want to have their stock bouncing around while the conference call is going on.
 I could be wrong, of course.  The news could be great.  Eddie could be announcing that he’s finally decided to spend a little cash on the business itself, rather than its stock, and is hiring somebody great—like JC Penney did when it hired Apple’s retail genius, Ron Johnson, a move that’s already proved worth every dollar for that faded department store brand—to turn the business around before it’s too late.
 Either way, good or bad, the call does mean one thing: Eddie needs Wall Street now, and he needs it more than Wall Street needs Sears.

Jeff Matthews
(eBooks on Investing, 2011)    Available now at

© 2012 NotMakingThisUp, LLC
The content contained in this blog represents only the opinions of Mr. Matthews.   Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.  This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever.  Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored.  The content herein is intended solely for the entertainment of the reader, and the author.


JoeKeller said...


I have recently made the rounds for appliance purchases for 2 rental properties: 2 of each of ranges, dishwashers, refrigerators.

Home Depot, Lowe's, P.C. Richards, high end Fairfield County independents, dent and scratch outlets...

Sears won both times.

Having had so-so experiences a few years ago, I took my Mom's advice and tried Sears.

They won on selection, price, adequately staffed sales staff, low-pressure sales, and installation costs. They asked once if I wanted the extended warranty and moved on.

Lowe's and Home Depot have been ghost towns as far as staffing goes, the staff at P.C. Richards was painful to deal with, and the independents lacked mid-range, sturdy, Consumer Reports approved units.

Deliveries were quick and on time. In fact, I took delivery not 1 hour ago from an independent contractor whose truck was fully loaded with other appliances.

I have no idea what that means for the stock...

If I were Eddie, I'd buy Ikea, retrofit, and attach the tools and appliance departments to them.

Unknown said...

Someone 'splain to me please. They missed earnings, announced they were splitting off more parts of the company to try and raise money, firing a bunch of people from HQ and the stock jumps 20%? I don't read much bad into their announcement, but I don't see much good either. Certainly not 20% worth.
I didn't listen to the call, so I don't know if I am missing something else, but this is some strange movement. What am I missing? Was WS just so enamored of hearing Lampert speak that they decided to reward him with a 20% gain?

OnTheMountain said...


Feeling a little squeezed?

Unknown said...

I like how Sears announced the selling of 11 stores for 270 million leaving the implication that the typical Sears store is worth 20+ million each. But the Sears property in the Ala Moana Center in Honolulu is the single best property in all of Sears and was probably worth 80% of the whole purchase price leaving the value of the other stores at 5 million each, not 20.

The next time Eddie wants to raise 270 million he will need to sell a lot more than 11 properties.

On a different Sears topic... Except for those at the highest levels who want to work for Eddie, why would the other 99% of Sears employees want to work at Sears? Lets say you are a product buyer,copy writer, IT employee, or store manager, how much fun can it be going to work knowing you can't get any capital for your projects? You've just got to figure that anyone with talent in that company is looking for another job.

Jeff Matthews said...

Editor's Note: Comments have been delayed owing to a glitch in Google Blogger, not for any other reason.

As for the "feeling a little squeezed?" comment, it's a dopey one and worthy of Yahoo Message Boards, not these pages. The comment-writer doesn't grasp that we never discuss stock prices in these pages, and never opine as to whether a particular company is a good investment or not.

The Sears short squeeze is a function of math (Eddie controls more shares than the shorts can borrow), not the business itself, which we have been poking fun at for years--correctly, I might add, despite a lot of heated "You don't understand the genius of Eddie" comments in years past, probably from the same guy who wrote the dopey "feeling a little squeezed?" remark.

As for the current Sears short squeeze, well, God bless both sides of the food fight in Sears!