The short squeeze was short lived.
Lampert takes hit on Sears holdings
SEC filings show his hedge fund buying into Fannie, other financials
By Sandra M. Jones | Tribune reporter
November 15, 2008
Sears Holdings Corp. Chairman Edward Lampert saw his investment in the retail chain dive to a record low Friday in the wake of the industry's worst monthly sales drop on record, while a regulatory filing disclosed that his hedge fund poured money into Capital One Financial Corp. and Fannie Mae.
Sears shares fell 14 percent, their biggest one-day drop, to $38.27, Friday after the Commerce Department reported a 2.8 percent decline in October retail sales. As recently as September, Sears stock was trading at more than $100.
ESL Investments Inc., Lampert's Greenwich, Conn.-based hedge fund, began buying shares in credit card issuer Capital One Financial last year. The fund held 9.9 million shares, valued at $504 million, as of Sept. 30, according to documents filed with the Securities and Exchange Commission late Friday. The fund also said it bought 34.6 million shares of mortgage giant Fannie Mae, valued at $52.9 million, in the quarter ended Sept. 30.
The U.S. government took control of the Federal National Mortgage Association, known as Fannie Mae, on Sept. 7, after a wave of mortgage defaults.
Additionally, Lampert's fund bought 550,000 shares of Hartford Financial Group Inc., worth $22.5 million, and nearly doubled his stake in CIT Group Inc., to 7.3 million shares worth $51 million, in the quarter, the filing said.
Lampert owns 52 percent of Hoffman Estates-based Sears through ESL, making it his largest equity investment. He also holds large stakes in AutoNation Inc., AutoZone Inc. and Citigroup Inc.
Activist hedge fund investor William Ackman, who had made a big bet on Sears a year ago, dumped most of those holdings last quarter. Pershing Square Capital Management LP, Ackman's New York-based hedge fund, held 501,000 shares of Sears as of Sept. 30, down from 6.7 million at the end of June, according to SEC filings. Ackman is known to invest in retail companies for their real estate.
smjones@tribune.com
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