Wednesday, February 16, 2011

Eddie Lampert & Gap

News of Ed Lampert's sizable investment in Gap, Inc sent shares of the latter up sharply yesterday.

Shares of Gap Inc. (GPS) climbed Tuesday as hedge fund billionaire and Sears Holding Corp. (SHLD) Chairman Edward Lampert reported holding a 5.8% stake in the retailer.

At midday yesterday, the Wall Street Journal reported,

"Lampert, known for large, concentrated bets on the stocks of a small number of companies, reported the stake in a 13G filing, or a filing for passive investors, with the Securities and Exchange Commission late Monday.
Lampert's ESL Partners, along with affiliates, reported beneficially holding 35 million common shares as of Monday.
Gap shares were recently trading 5.8% higher at $22.72.
Investors are "excited that he may see some value in a retailer that has been struggling with its merchandising," said Wedbush Securities analyst Betty Chen."

Looking at the price chart for Sears Holdings, Gap, Inc. and the S&P500 Index since late 2003, it's difficult to see why Gap shareholders would cheer Lampert's control over the struggling retailer. Granted, anyone buying into it would be cause to celebrate- after dumping your shares.
But look at the price curve for Sears after Lampert's early-2005 takeover. It's worse than the S&P and Gap,  which tracked together over the period.
Just how is it that Lampert will do for Gap what he hasn't managed to do at Sears/KMart?
Beats me.
Has Lampert lost his touch, too, as I muse about William Ackman in today's next post?

1 comment:

MSF said...

surprise surprise