Citigroup's Search For A New CEO: Vikram Pandit???!!!!!!

This morning's Wall Street Journal features an article on the front page of the Money & Investing section focusing on Vikram Pandit as the lead internal CEO candidate for Citigroup.

To say the piece is laughable is being charitable. Some of the quotes and information about Pandit makes you wonder if, in any other organization, the guy would even still have a job. At Citi, appropriately dysfunctionally, instead, he's a leading candidate for the CEO job.

The board at Citigroup must be so proud!

Consider the information reported in the article,

"Vikram Pandit's stature has been rising ever since he joined Citigroup Inc. in July. But Old Lane Partners, the hedge fund that he co-founded and that was sold to the financial-services firm earlier this year, hasn't enjoyed the same kind of success.

Now, with Mr. Pandit among the finalists to succeed Charles Prince as Citigroup's chief executive, Old Lane is getting fresh attention from investors. While the past few months have been tough on many hedge funds, Old Lane's performance has fallen short of the high expectations that Citigroup had when it shelled out more than $800 million to buy the fund.

Citigroup's goal was to use Old Lane and its well-regarded management team to jump-start the New York bank's small alternative-investments business. Mr. Pandit and Old Lane's other founders, meanwhile, said that being part of a giant bank would help them attract fresh capital.

It hasn't worked out that way.

Old Lane lost money in November, falling about 1%, according to people familiar with the matter. That stacks up well against other funds, which lost an average of about 2.4% last month, according to Hedge Fund Research Inc. But it weighed down Old Lane's returns for the year, which now are about 3%, lagging behind the average hedge fund's roughly 10% gain."

So, to summarize, Citigroup paid Pandit a small- well, pretty hefty, actually- fortune for his nascent, less-than-a-year-old hedge fund. Since then, it's underperformed its peer group.

As a related, confirming data point, I ran into an old money management acquaintance, D, this fall in a local restaurant. I had, as it happened, seen him at my squash club at midday several times in the prior two weeks. So I had already figured he was no longer with Citi's alternative investments group.

I was correct. When I innocently inquired how things at Citigroup were, he confirmed that his boss had been tossed out a few months earlier by Pandit's crew. Now, D was gone, too. It turns out that his particular hedge fund overlapped with Pandit's own Old Lane product. D's fund had a good August, while Pandit's cratered badly. For the year, D's fund outpaced Pandit's Old Lane product as well.

Too bad for D. He and his fund were tossed, while Vikram concentrated on managing the whole enchilada of the alternative investments group.

This anecdote tells me two things. First, Pandit is as much a political operator as he is an effective executive, clearing out competing internal interests as he extended his authority throughout Citi's alternative investments group. Second, he has no confirmed record of success in his latest chosen career.

With that as background, let's consider more from the Journal piece,

"Mr. Pandit, who ran Morgan Stanley's powerful institutional securities before leaving after a management shakeup in 2005, is one of four remaining candidates for the CEO position that Mr. Prince vacated last month as the bank warned of billions of dollars in mortgage-related losses.

While other Citigroup executives -- including Ajay Banga, who runs the bank's international consumer group, and Chief Financial Officer Gary Crittenden -- have been interviewed for the CEO job, Mr. Pandit is the leading internal candidate, according to people familiar with the matter.

In its first year since launching in April 2006, Old Lane generated a roughly 6.5% return, which is respectable for a newly launched fund. This year, the fund was headed for a roughly 16% annual gain before a credit storm hit in August, roiling global markets and leading Old Lane to a 5.9% loss for the month, according to a person close to the fund. That was one of only four months in which Old Lane has lost money, this person said.

Some Old Lane investors say the performance wasn't as good as expected this year in part because Mr. Pandit has been distracted by his Citigroup duties and tumult at the top of the bank.

Old Lane's performance doesn't necessarily undercut Mr. Pandit's qualifications to run one of the world's biggest banks. Some bankers say that managing a hedge fund and running a $170 billion bank require different skills.

Old Lane's lackluster showing shouldn't be a strike against Mr. Pandit, says Joe McCabe, vice chairman of executive-search firm CTPartners in Boston.

Old Lane was "a warm-up act compared to being the CEO of Citigroup," he says. "I wouldn't hold it against him."

Old Lane's track record also raises questions about the amount that Citigroup paid for the fund in April, when it had been operating for barely a year. The acquisition was the brainchild of Robert Rubin, Citigroup's current chairman and a former Treasury secretary who is now the main advocate of Mr. Pandit becoming CEO.

The $800 million-plus price tag represented at least 18% of Old Lane's roughly $4.5 billion in assets under management at the time. That was a generous premium. Publicly traded alternative-investment firms such as Blackstone Group, Fortress Investment Group and Och-Ziff Capital Management command market values that are 3%-6% of assets.

But since joining Citigroup, Old Lane hasn't bulked up its assets under management. As of early September, the fund was overseeing nearly $4.25 billion, compared to about $4.5 billion in April. Old Lane today manages more than $4 billion, say people familiar with the matter."

Now, let's think about Pandit's track record at this point. According to the Journal article, he "ran Morgan Stanley's powerful institutional securities before leaving after a management shakeup in 2005."

So he hadn't apparently actually been in asset management, or an asset manager, at Morgan Stanley. Yet he forms Old Lane, attracts investors, then gets bought out by Citigroup within a year. But the hedge fund actually loses assets while under Pandit's management at Citi, as its performance trails its peer group.

You can imagine how a hypothetical interview of Pandit by Citi's board might go.....

Board Members: Vikram, when Bob Rubin offered to buy your Old Lane hedge fund firm for about 3x the going rate, and make you head of our alternative investments division, what was your reaction?

Pandit: Well, I thought about his offer for, oh, maybe 5 or six 6 seconds, and then accepted.

Board: OK. Now, you launched Old Lane after bailing out at Morgan Stanley, during that unpleasantness between Purcell, the old bulls, Zoe Cruz, etc. You didn't have any particular equity management experience?

Pandit: No, not really.

Board: You attracted slightly more than $4B, and proceeded to underperform your peer group, even after arriving here?

Pandit, Yes, that's about right.

Board: So you left one job. Started a new career and are underperforming in that?

Pandit: Yes, again, that would be about the size of it.

Board: Well, we see no reason why you shouldn't be the lead internal candidate for CEO of our nearly-impossible-to-manage-or-understand money center bank.

Pandti: Great. That's terrific news. I'll look forward to your decision.

How many of us believe prior failure in one's chosen line of work makes you ideally qualified for a new, unrelated, much more difficult job?

How many people, having done what Pandit has for the past 18 months, would even still have their job?

Reading this piece in the Journal this morning, especially the hilarious quote from the executive search firm VP, McCabe, only confirms my sense that Citigroup remains totally dysfunctional. Rubin not only fiddled while Citigroup faltered, he then compounded his bad judgment by overpaying an unqualified executive to become head of all Citi's alternative investments. Now, he wants to promote him another level up beyond his demonstrated competency, to CEO of the entire firm.

As I wrote here and here recently, it should really just be broken up into its understandable components, each being either spun off independently, or sold to a logical buyer.

Maybe, though, Rubin has to be forced off the board first, before any sensible next steps can occur at the seriously damaged bank.

Nice job, Bob.

Brokerage Deregulation & Equity Market Research

Off and on during almost any year, you may read some equity researcher's findings which compare the present period (you choose the year, it rarely matters) with some 'similar' period from the 1920s, or 1940s, 1960s, etc. Adjustments are made for inflation, other factors, various lags are introduced, and, voila! Some chart of market index activity from the present will coincide with a far-earlier period of equity market activity.

Past is prologue!

But is it?

Last week, for a reason I can't now recall, I was discussing equity market changes with my business partner at our weekly lunch meeting. Since our partnership exists primarily to employ my proprietary equity-related portfolio strategies in managing his assets, managerial and, to be honest, operational overheads are virtually non-existent. We handle any non-recurring or non-operational issues during one two-hour lunch meeting each week.

As we discussed the evolution of equity markets over the past thirty years, I became aware of a rather arcane fact that isn't widely publicized.

Prior to the US stock market's "Big Bang" of 1975, wherein equity brokerage rates were deregulated, a retail investor paid 7% (or perhaps 7.5%- my partner and I can't recall precisely which it was, and Googling this topic has brought me no closer to the answer) to trade equities.

For a round trip trade, i.e., selling a position, then buying another, a retail investor would thus pay a 14% commission. Not many people seem to mention this when they report on research conducted on time periods pre-dating 1975.

Why is this important? Well, the long-run annual return of the S&P500 Index is 11%. So, prior to 1975, a retail investor who traded positions began the new one 3% points in the hole, relative to the S&P. No wonder people held stocks for very long periods. The barrier to switching equity investments was greater than the expected long run annual return of the market.

Institutional investors, my partner and I reasoned, were similarly higher pre-1975 than they have become. If they were only in the 2-3% range, this, too, would have substantially moderated investor reaction to news. When each shift in positions costs you 1/3 to 1/2 of the S&P's annual return, you think very carefully about trading.

Thus, the effect of information on investor actions, whether retail or institutional, has probably changed radically since 1975. So much so, I would argue, that the two periods, pre- and post-deregulation, are incomparable for assessing market dynamics.

It is very much like the nonsensical use of static revenue-scoring tax models by the Congressional Budget Office. Every thinking, informed person knows that lower tax rates change taxpayer behaviors. Yet the CBO continues to insist on assuming that tax rate reductions have no effect on economic behavior, and, thus, 'lose' revenue on a static base of economic activity.

Thus, I tend to view equity market behaviors as essentially starting over after 1975, due to this very significant change in the cost of trading. Add in the effects of financial information becoming available to individual PCs in the 1990s, and the rise of robust, liquid equity derivatives, plus more robust institutional program trading, and I think one is hard pressed to claim that any lengthy period in equity markets since 1975 is comparable to another, until roughly 2000.

I think it's worth keeping this perspective in mind the next time you read some pundit's research on significant patterns over 60-80 years of equity market behavior.

More Evidence On The SIV Reciprocal Con Game: Florida's LGIP

Just over a month ago, I wrote this post on the topic of what I called the SIV "Double Con." That is, the belief by both experienced institutional investors at various endowments and public entities (municipalities and other government or union entities), and their counterparties at SIVs, that each was getting 'something for nothing' from the other in the sale of SIV commercial paper.

I won't bother pasting my example from the linked post. You can just read it in its entirety via the above link.

However, this morning's Wall Street Journal carries two articles concerning Florida's Local Government Investment Pool's crisis arising from its purchase of SIV commercial paper. One of these articles is by the folks at breakingviews.com. Once again, they confirm my earlier contentions.

To wit, they note,

"A much bigger Florida state-run fund with SIV exposure had nearly half its $27 billion of assets pulled out by local governments, school districts and other depositors before its managers froze withdrawals last week and brought in BlackRock to find a way to limit the damage. Around $2 billion of the most problematic paper is being carved out into a separate fund.

At least one head has already rolled in Florida. In Orange County, checks and balances put in place since 1994 may have kept investments at the relatively safe end of the SIV spectrum. Still, you would expect the county's treasury staff to have been particularly skeptical when Wall Street peddled highly rated paper paying interest at rates usually associated with riskier assets. If it looks too good to be true, it probably is."

Note that last sentence, "If it looks too good to be true, it probably is."

By all rights, a lot of heads ought to be rolling at various similar funds which are also experiencing these SIV-related problems.

But not bailouts. These entities obviously didn't exercise sufficient oversight of their own investment committees to assure that prudent investment policies were followed. They must answer to their members or voters, depending upon what type of entities they are. But their losses are their own. Nobody else's tax money should be rescuing these giant investment pools.

Thain's New Merrill Lynch

This morning's Wall Street Journal carries a piece by their guest columnists at breakingviewscom entitled "Merrill's Goldman Redux." Sometimes I think those guys might actually read my blog, because they periodically repeat my own themes and conclusions.

Today is one such day.

Back on November 15th, I wrote this post, wherein I opined that John Thain is poised to transform Merrill from the piece of financial services junk it currently is, to a new breed of Goldman Sachs-Blackstone. I wrote, in part,

"My partner and I discussed Thain's move into the Merrill CEO job last night, and agreed that he probably took the job because it will allow him to build something himself. He inherited a senior management post at the already-smoothly functioning Goldman. He transformed the NYSE, but, again, from an already-powerful position.

Perhaps at Merrill, he feels he can retool a company and be credited with the entire value creation job.

My own prediction is likely to be seen as nonsensical. But, here it is. I think there's a significant probability that Thain will simply sell the brokerage business to another firm. Perhaps Wachovia. He could sell it to Citigroup, if it finds a new CEO and can afford the price.

But I think Thain will consider it. First, it doesn't involve firing anyone- simply divesting Merrill of a dead-end business. As I've written elsewhere in this column, who trades with full-price, full-service brokers anymore except older, and/or less sophisticated clients? It's not a business with a future. There's a reason Merrill is the only surviving predominantly retail wire house.

In a world with Fidelity Investments, Vanguard, E*Trade, Scott Trade and Schwab, how many observers of this sector believe that full-service, personal retail brokerage is a business with a profitable, growth-generating future?

I was wrong about Thain taking the Merrill job. But he's a very smart, seasoned, tough manager. I don't think he believes he can take Merrill to where Goldman has been without throwing the retail business over the side.

My partner and I believe that Thain sees an opportunity to recruit top talent to join him in building the next Goldman Sachs or Blackstone. Coming from the NYSE, rather than directly from Goldman, he's probably not operating under any sort of agreement not to poach Goldman employees. None of them, nor Thain, has managed retail brokerage, nor has needed it to become the best-performing investment bank in recent years."

This morning, the breakingviews columnists Mike Prest, Jeff Segal and Robert Cyran echoed my sentiments. They write, in part,

"John Thain, the new Merrill Lynch boss, says he wants the Thundering Herd to be more like Goldman Sachs Group, his old shop. After the trauma of Stan O'Neal's leadership, Merrill certainly needs tighter risk management and a more-collegial culture. But emulating Goldman too slavishly may not be a good idea. It's just as important to recognize where Merrill's competitive advantages lie.

If anyone can bring the Goldman Way to bear on Merrill it should be Mr. Thain, who was co-president and chief operating officer at Goldman. He must be aware, however, that Merrill and Goldman are chalk and cheese. Merrill has been a public company for more than 30 years; Goldman, public since 1999, is still run like a partnership. Merrill has a huge retail brokerage business; Goldman is the consummate institutional firm. Merrill has suffered a near-dictatorship; Goldman's decision-making is collective, sometimes painfully so.

Then there are the shifting sands of time. Every era has its outstanding banks -- the Rothschilds and Barings in the 19th century; J.P. Morgan on Wall Street at the dawn of the 20th; the Warburgs in postwar London. Goldman is the franchise of the moment, but to emulate it now is as futile as copying the Warburgs half a century ago.

Success comes from cultivating one's strengths and learning from rivals. Merrill has a powerful brand, strong distribution through its army of brokers and geographic reach. Mr. Thain should look inward as well as outward for the keys to its recovery."

First, I should state that I'm only partially serious about the breakingviews column following my own themes and positions. At least on this story.

There are really only two options Thain has at Merrill- fix it as is, or transform it. And everybody knows how well Goldman has performed for two decades, so it doesn't take a genius to guess that maybe Thain will tilt his new Merrill in Goldman's direction.

However, my point is still slightly different than that of the Journal's piece. They claim Merrill 'has a powerful brand.' I disagree. I doubt Merrill ever had a 'powerful brand,' other than probably defined by retail market share pre-deregulation of brokerage rates in the US.

Further, the breakingviews trio mention prior dominant financial houses in terms of centuries or decades. Then proceeds to cast Goldman as the 'franchise of the moment.'

I think it's going to be a really long 'moment.'

Let's give Goldman's rise a commencement sometime in the late 1980s. I former officemate of mine at the Wharton Applied Research Center in the late 1970s joined Goldman, rather than McKinsey, and received derisive comments for his choice.

By the time he made partner, from Goldman's Boisi-led M&A group in 1988, the firm had broken onto the Wall Street scene in a big way. So it is probably only in its second decade of equity market dominance. It's reasonable to give it another five to ten years at the top. As it is, Blackstone is arguably an equivalent performing rival now.

So, between the two, as I argued in my cited prior post, you have a target at which Thain would reasonable aim. A firm like that could easily share dominance with Goldman, Blackstone, et.al., for a decade or more.

Merrill, on the other hand, is a wreck. It hasn't been a stellar equity performer for shareholders for a decade, as the nearby Yahoo-sourced chart displays. And it pretty much lost the 1980s, too.

It's shareholder total return performance heyday was clearly 1991-2000, with timeouts in 1993-95 and 1998-99. Meaning about six out of the ten years of that decade.

No, I think it's safe to say Thain will ditch the current form of Merrill, and build a securities sector firm with the best features, in his opinion, of Goldman, Blackstone, and other private equity/hedge fund firms.

Goldman's time is not yet finished as the premier public investment bank. Thain will do well to incorporate large parts of its culture, senior executives, and business mix at Merrill.

Alleged Research On Judgment Versus Experience

Last Thursday's Wall Street Journal featured an editorial by two professors of management, Noel Tichy and Warren Bennis. Tichy used to be Jack Welch's HR guru, way back when he was in the middle of changing GE's once-vaunted management education systems.

I wrote a review of this article in my linked political blog, here, which includes more pointed partisan comments from which I attempt to refrain in this blog.

Rather, in this post, I'd like to reiterate and extend my comments about Tichy's and Bennis' suspect research. In the other post, I wrote, in part,

"Just how does one study 'leadership covering virtually all sectors of American life?'What was their sample size? Their research instrument? How did they test the instrument for content and predictive validity? How does one measure 'judgment,' or 'experience?' How does one measure outcomes of various levels of each quality?

How in the heck do you study qualities like 'judgment,' and believe you know good from bad, for the purposes of projecting the results to America, in its every aspect?Could there not be some interaction effects? Perhaps some level of judgment, mixed with some level of experience, might be better than either one alone? How would you measure those?

This piece was, on the whole, completely unconvincing to me. It suggests the sort of 'research' that emanates from the 'management' field in business schools that give the discipline such a bad name. It seems to me that 'management' degrees are to business schools what 'communications' degree is for liberal arts.

And that's not a compliment.

I found this piece to be an embarrassment in terms of calling Tichy's and Bennis' effort 'research.' It would take a far more detailed explanation of this sort of work for me to accept the methodology and conclusions. Qualitative areas such as these invite poor research to be performed and communicated, without readers of the results fully understanding how it was attempted."

In business, such research would likely require financial performance measures that the authors don't divulge in their editorial, yet they claim to have studied all sectors of American life. Presumably, this includes business. If not, of what value is this to readers of the Journal?

But, let's look at their work from a different angle. In terms of Schumpeterian dynamics, environments change quickly, requiring adaptation and response from businesses. Failure to do so usually means a more rapid decline in the business' fortunes. Thus, just from Schumpeter's work, which first appeared some eighty years ago, we would tend to value informed judgment over pure experience in a dynamic economic system.

That is to say, pure experience is probably not good at leading companies to consistent prosperity in a rapidly-changing competitive environment. Yet, pure judgment, without any experiential information, while perhaps better, is not necessarily superior. Change must be informed and purposeful to lead to good decisions.

Common sense would already suggest that a bias for good judgment, with the support of experience, perhaps among a business' staff, would probably result in the highest probability of long term organizational success for businesses in our modern competitive environment.

With that as my null hypothesis, I'd appreciate research that provided more detail as to what mix, at what organizational levels, of judgment and experience, led to better results.

Instead, Bennis and Tichy give us a rather simplistic finding that judgment 'always trumps.'

That's just not good enough. It adds little, if any value to what any decent board would already suspect. That is, hire a CEO for his/her ability to anticipate and take advantage of change, i.e., judgment. Experience needs to reside somewhere in the organization. But, surely, a board is not going to hire a CEO knowing the candidate has abysmal judgment, but plenty of experience in the business.

To me, the Tichy-Bennis piece reinforces my growing belief that the value of an MBA is lessening, and that 'management' teaching in those programs continues to have little relevance to real world applications.

Dennis Kneale on Google

Last Friday on CNBC, Dennis Kneale, the network's new main print guest, and managing editor at Forbes, laid out a simple explanation for Google's continuing spreading of its resources across so many areas- search, advertising, telephony and space, to name just a few.


Kneale pointed out that Google CEO Eric Schmidt ran two companies- Novell and Sun- which were heavily damaged from competition with Microsoft. In Kneale's view, Google's many investments constitute a continuing campaign by Schmidt to pulverize his former nemesis.


Call me, well, sceptical- of pure corporate motives- but I think his explanation makes some sense. Some corporate leaders can't let go of old grudges, and begin to use their shareholders' assets to settle personal scores. Or simply advance personal agendas.


I, too, along with Kneale, think Google is courting disaster with its ever-widening business reach. I wrote this post a little over two years ago, shortly after the birth of this blog. In that post, I wrote,

"I think that the two guys who founded google are very smart. They built a better search engine, but they realize the next great search engine is likely to surpass them, just as they dethroned Alta Vista. Yes, there actually were search engines prior to Google. A friend mentioned to me a few months ago for how little Alta Vista was ultimately purchased by some European company. It was pathetic.

I believe that the owners- excuse me, senior executives now- of Google realize that their best hope for continued consistent value, and thus wealth, creation is to become so entangled in the online habits of their customers that Google is no longer perceived as a search engine. Otherwise, they face the ever present threat of rapid decline.

Consider this. The two founders of Google probably don’t spend as much time creating new and better search procedures as they once did. Further, current students at better engineering schools across the country now have something at which to aim. By virtue of its current dominance, Google probably can’t take advantage of the next smart search engine designer’s new twist. And, to be honest, using a new search engine is ultimately as simple as going to a new website.

Thus, the rapid expansion by Google into, well, just about anything online that can tie your behavior into their brand, rather than their search engine, per se. For example, email services, instant messaging programs, a whispered foray into the remains of AOL, wifi rollouts in San Francisco, and, now, a voluminous database of searchable literary content. They must be really worried. Because very little of these enterprises, by themselves, require integrated consumer behavior. Rather, a single company offering all of them hopes they can bend consumer behavior to their version of service packaging.

Not likely in this internet and information age, is that?"

I still believe this to be true. And I think it reflects what Dennis Kneale observes in Google's current environment. They are just throwing resources at anything they believe can bring traffic and make a few bucks. Anything to complicate their business model, so it doesn't appear to all hinge on a search engine which continues to age.

Sure, if someone dreams up a significant advance in search technology, Google may just buy them out. Still, isn't that a sign that a company is already aging? When it can't sufficiently improve its own core technology to fend off competitors, and needs to share its wealth with them?

Which, of course, is an insidious form of trust-forming behavior. Rather than let a competitor get a foothold, just license their technology, which is legal under Sherman and Clayton Anti-trust law. Or buy a firm that is so small that it won't trigger FTC review.

But Google seems to be already so sprawling in its business endeavors as to be unmanageable, in the conventional sense of the word.

Cisco was once deemed to be the ne plus ultra of high-growth tech firms. Then it flamed out in the bursting tech bubble of 2000.

Could Google begin to slow from a gradual inability control/manage itself, and simply fail to appropriately allocate resources among so many competing projects, many of which will have serious competition?

Personally, I think it will. It's just the way businesses mature, irrespective of the content of their industry.

Two Over-rated Investment Pros: Ed Lampert and Warren Buffett

As of last week, some say Ed Lampert has now failed to become the 'next Warren Buffett.'

He should have aimed much, much higher.

With the release of Sears' dismal last quarter results, and the plunging price of Citigroup shares, Lampert's investing and operations savvy are both now being called into question.

Thus, pundits who had been thinking that Lampert would soon replace Warren Buffett as the country's most admired investor and quasi-operating business portfolio manager are now looking elsewhere.

It's just my opinion, but I think the pundits should have looked to someone else as the current 'most admired' investor.


In truth, Buffett's company, Berkshire Hathaway's stock has been nothing to write home about for years.

As the nearby Yahoo-sourced stock price for the past five years indicates, Berkshire has barely outpaced the S&P500 Index over the time period. There is no healthy spurt of price appreciation which accelerated Berkshire far away from the returns of the index since late 2003.

And, as recently as a few months ago, it was dead even with the index. As the next Yahoo-sourced chart shows, in greater detail, The S&P was ahead of Berkshire for about two months in the middle of this year. Late September saw the two at parity, meaning that all of this year's advantage in Berkshire's performance may be attributed to just nine weeks.

For an investor, that would be pretty awesome timing- to catch Berkshire just for the prime two-plus months in which it actually bested the market.

Surely America's highly touted, greatest institutional investor can do better than that over half of a decade? Maybe GE CEO Jeff Immelt would better use his time, on behalf of his bereft, performance-starved shareholders, visiting an institutional investment manager with a better record than Buffett?

Now, it seems, Lampert's entanglement with Sears, and his mis-timed Citigroup investments, have sullied his record. And, in his own right, Lampert surely is looking questionable as an investor now.

Of course, he claims that nobody understands his long term investment focus at Sears, nor how long and difficult the turnaround will be.

Maybe so. But the best situation for investors is a consistently superior issue whose returns regularly outperform the market. Not some risky bet that an institutional money manager can magically turn around operating performance at an also-ran retail giant.

Personally, I'd guess that the crown for best, most consistently-superior institutional manager belongs to one of the mid- to large-sized hedge funds. But those are performance results which are harder to come by, at least for free, and difficult to verify.

But it certainly is not Warren Buffett. And it looks like it won't be Ed Lampert anytime soon.