Edward S. Lampert has made no secret of wanting to follow in the footsteps of his hero, Warren E. Buffett. Like the Sage of Omaha, Lampert formed a partnership at age 25 and invested in old-line companies that throw off lots of cash. And just as Buffett did with Berkshire Hathaway Inc., Lampert gained control of bankrupt discounter Kmart Corp. last year, hinting he would turn it into a powerful investment vehicle. Then, on Nov. 17, Lampert swooped in and launched an $11 billion purchase of Sears, Roebuck & Co. (SHLD).Has Fast Eddie lost his golden touch?
We don't think so but in the short term Mr. Lampert has two major problems on his hands Sears Holdings Corp (SHLD) and Citi (C) It may be a while before he shines with these two iconic giants. Now Mr. Lambert is a very patient investor and both Sears and Citi are great franchises that normally churn out cash like a printing machine. So it was a shock when Sears Holdings Corp reported sharply lower third-quarter profits on Thursday, plummeting its shares down more than 14 percent to new lows.
It's good enough for these well know guys.
For moguls like Michael Dell and David Geffen, Edward S. (Eddie) Lampert is the go-to money manager. The brightest minds on Wall Street piggyback his trades. Just 43, he's a self-made billionaire who mixes bets on down-and-out investments with unnatural patience. No one has more faith in Eddie than Eddie. Which may explain why he's so comfortable leading Wall Street in the new world of high finance, one in which hedge funds like his and giant buyout firms are going toe-to-toe in the arena known as private equity. Lampert is part of the new breed of hedgies who have gone from passive investing to actively buying and managing firms to seek outsize returns.
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Eddie Lampert has a great long-term track record, but can he run big companies?
We are going to wait until both Sears and CITI reverse their current down trends and are in clear uptrends before we go long.
We have never been strong fans of catching falling knives or trying to pick bottom bottoms in a market.
Adam Hewison
