Slicing up Eddie Lamperts Pie!?$$$

I thought this might be a good time for an up date on Sears Holdings $SHLD considering they just released earnings yesterday of $2.94 excl items vs. estimate of $2.68. While the economy sank deeper into a recession Sears held up fairly well. However many financial media pundits talk otherwise. To the ones that are new to this story let me catch you up. Mr. Edward Lampert who is the Chairman of Sears Holdings runs a Hedge Fund- ESL Investments. The Hedge Fund or ESL has 16 stocks in its portfolio totaling over 7 billion with SHLD and AutoZone $AZO making up the lions share at 75%. Lampert bought into Kmart in 2003 and Sears in 2005 and merged the two companies. The company had success coming out of the box with the stock fetching as much as $195 a share. This was due to many investors thinking Lampert would sell off part of its large real estate holdings. This has not occurred and we all know what the economy has done over the last year and a half- tanked. Many investors jumped aboard this stock solely due to its real estate, that's fine but since the stock has gone south many bailed and seem to think Sears better days are behind them. As a retailer this may be true but as a potential Investment Holding company I think otherwise. Many large profiled investment companies have been in and (out) of this stock. Two of the larger players that have their funds money invested are the Fairholme Fund run by Bruce Berkowitz and the Third Avenue Fund fund run by the veteran Marty Whitman. With the economy in tough times this company along with the majority of others will take time to pay off or will it PAY off? Lampert states in his current news letter:

Sears will continue to evaluate opportunities based upon our expectations for returns and continue to experiment with a variety of options where the returns could justify higher levels of investment...

• Taking this approach a step further this month with plans to close its Joliet, Ill., Kmart store and transform it into MyGofer, a store where buyers can pick up their online orders. An estimated 80% of the facility will be dedicated to merchandise storage; 20% will be allotted for showroom space.
• The public launch of ServiceLive earlier this month is another example of how we are creating relationships with customers that empower them to manage their lives. ServiceLive.com is an online marketplace where homeowners and businesses can name their price for a wide variety of services, improvements and repairs.
  
• The company said Kmart, which has benefited from increased layaway sales to cost-conscious shoppers, increased its adjusted earnings before interest and taxes from the prior year.
• Reduced short-term borrowings on its $4 billion revolving credit line to $435 million as of January 31 from $1.9 billion at November 1, 2008.
• Plans to close 24 stores in addition to the eight already announced.
• Repurchased 2.9 million shares for $120 million and debt securities for $29 million during the fourth quarter
• Maintained strong balance sheet and liquidity position
• Cash balance of $1.3bil as of January 31st 2009 vs. $1.6bil February 2nd 2008
• Kmart began operating its own footwear business on January 1, 2009, which had previously been operated by a third party
  

Heres what Mr. Lampert had to say in a letter to shareholders

Relevent Articles

Sears Not Just Your Average Retailer STOCKMANMARC

Sears Is Holding Strong Todd Sullivan@ValuePlays

Sears Prunes Back To Conserve Cash Forbes

Microsoft's Page O' History, 0.4% Returns,P/E's and A Deal?

Friday's Links:

Microsoft taking a page from history.

At the end of 2007 a 0.4% annual return would not have turned any heads, however flash forward a year later when the average stock fund was down almost  -40%.

Should we weight the P/E ratio the same way companies are weighted in the index. 

A Deal for who?

$NYT, Railroads, And Lumberjacks?

Thursday's Links...

Which offers a better value? its stock price or its product: The New York Times news paper

Jim Cramer started as a news reporter, turned Hedge Fund Guy, turnedT.V. personality now working on the railroads?

During the Hard Times of the 1930's, Lumberjacks fared well working in an industry that had a 120% return.

A Market Low? A Good Attitude! And American Autos?

Wednesday's Links...

Markets tend to make higher highs and lower lows

If only more Companies/People would have this attitude.......Cheers to Open Source Investing!

Why is this so surprising? Most people I know drive foreign Autos.

Mohnish Pabrai Files 13F-HR

Mohnish Pabrai increases holdings from 16 to 20 holdings, unloads MDC Holdings(MDC)  and Jackson Hewitt(JTX)  while adding new positions in  Cresud(CRESY), Goldman Sachs(GS), Horsehead Holdings(ZINC), Leucadia National Corp(LUK), Potash Corp(POT) and Teck Cominco(TCK). Lets hope Pabrai aka The Dhandho Investor  can get back on track after suffering through a terrible 2008. Pabrai has made a name for himself over the last few years after racking up Warren Buffett size returns from 1999 until the market went southbound. Pabrai bases his partnership on The Buffet Partnership of the 1960's. Here is the latest 13F for the Pabrai Funds. 

Be sure and check out Mohnish Pabrai 2008 Year End Letter over at Todd Sullivan's - ValuePlays 

Relevant Articles:

The Dhandho Investor Buys Into Zinc!

Stock Analysis on a small cap: Horsehead Holdings

Buffett's Other Companies

We here plenty about Warren Buffett and the large publicly traded companies that are major investments of his holding company Berkshire Hathaway(BRKA,BRKB). However we rarely here anything about the many companies that are partially or wholly owned subsidiaries, which total around fifty in all. They range from a candy maker, boot company, paint manufacturer, to the worlds largest carpet company. In fact Buffett prefers to buy the whole company because it permits him in influencing the most critical part of the business: capital allocation.  Over the last 40 years Buffett has bought entire businesses as well as his huge stakes in $AXP, $WFC, $KO, $JNJ and $PG. One interesting company that Berkshire bought into within the last year and a half is The Marmon Group, which into itself is a holding company that runs 130 business units that operate independently within diverse business sectors.  As Buffet has stated many times before:

 I buy businesses, not stocks, businesses I would be willing to own forever.

I am a better investor because I am a businessman and a better businessman because I am an investor.

Here is a further list of Berkshire Hathaway's subsidiaries 

Mini Berkshire "Markel Corp" Files 13F-HR

Markel Corp (MKL) filed their 13F-HR earlier this week. As we all know even the best money managers in the business have been taking it on the chin and Markel's  Chief Investment Officer Tom Gayner was no exception. For the quarter ending in September 2008 Markel held 124 stocks in their investment portfolio totaling $1.5 billion dollars and by the end of this last quarter December 2008 their were 110 stock positions totaling 1.1 billion dollars. One of the biggest loser's that Gayner cut loose was LandAmerica Financial (LFGRQ.PK) that traded as high as $45.21 a share in the last 52 weeks and is now listed in the Pink Sheets for a nickel per share. Gayner increased his stakes in Brookfield Asset Mgmt(BAM) an asset management company with diverse holdings and $50 billion under management. Gayner also increased his holdings in Diago plc(DEO) a large producer and distiller of spirits, beer and wines. The Walt Disney Co. (DIS) the large diversified  entertainment company and the creator of Mickey Mouse and friends was another holding where he upped his position.

Here is a closer look at Markel Corporations Holdings

Relevant Articles:

3 Mini Berkshire Hathaways???

Leucadia National In The Shadows Of Berkshire?

Fairfax Financial Holdings Looking Cheap!

Markel Muscles Its Way Forward

Author is long MKL

Buffetts "Build Your Dream" In China???

Here are some interesting links...

Did Warren Buffett say he did not  invest in technology?  Well electric cars are certainly technology maybe nothing new but building and selling these vehicles on a wide scale is picking up steam. Berkshire Hathaway's(BRKA,BRKB)  subsidiary MidAmerican Energy Holdings owns a 10% stake in this "Dream"

The Wall Street Journal reported  that U.S. Firms Join Forces to Build Car Batteries

With rising fuel cost companies are looking for other alternatives in the car industry and 

Buffett is seemingly taking the cheaper route by investing in an established company.

Cash Is King For These Lucky 7

As I wrote a few weeks ago, that while we are in a down economy look for stocks that hold lots of cash and very little to NO debt. Some of you might say, why not just hold cash, isn't this better. Well certainly in the short term it is, but over a longer period your cash will be eaten up by inflation. How about Bonds? Well bonds may pay a better rate than cash and what I mean by cash is in short term instruments, 2 years and under. I have added a few more cash rich companies to my existing list.

The Buckle(BKE) operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. The company’s casual apparel products include denims, bottoms, tops, sportswear, and outerwear. As of February 2, 2008, it operated 368 retail stores under the ‘Buckle’ and ‘The Buckle’ brand names. The company was founded in 1948. It was formerly known as Mills Clothing, Inc. and changed its name to The Buckle, Inc. in 1991. The Buckle is headquartered in Kearney, Nebraska.

Here's what they are saying over at the Street.com.

• Market Cap 1.08 bil.
  
• Revenue 748mil.
  
• CASH 118MIL.
  
• NO DEBT
  
• Mgmt. owns 50%
  
• Small cap specialist Royce & Associates holds 5% stake.
  

Forest Laboratories(FRX) together with its subsidiaries, develops, manufactures, and sells branded and generic forms of ethical drug products, and non-prescription pharmaceutical products.

• Market Cap 7.7bil.
  
• Revenue 3.85bil.
  
• CASH 1.9bil.
  
• NO DEBT
  
• Value Investor Bruce Burkowitz and Fairholme Capital Mgmt. holds 6% stake.
  

Garmin(GRMN) and its subsidiaries design, develop, manufacture, and market global positioning system (GPS)-enabled products and other related navigation, communications, and information products worldwide.

• Market Cap 3.4bil.
  
• Revenue 3.6bil.
  
• CASH 540mil.
  
• NO DEBT
  
• Mgmt. owns 43%
  
• The Davis Funds the company that legendary investor Shelby Davis started in 1947 holds a 2.6% stake.
  

LoopNet(LOOP) operates an online marketplace for commercial real estate in the United States. Its online marketplace, LoopNet.com enables commercial real estate agents working on behalf of property owners and landlords to list properties for sale or for lease by submitting detailed property listing information, including descriptions, financial and tenant information, photographs, and property characteristics in order to find a buyer or tenant.

Here is what they are saying over at the Fool.com.

• Market Cap 240mil.
  
• Revenue 85mil.
  
• CASH 69mil.
  
• NO DEBT
  
• Mgmt. owns 18%
  
• Small cap specialist Royce & Associates holds 2.6% stake.
  

Microsoft Corporation(MSFT) provides software products for computing devices worldwide. Its Client segment offers Windows product family that comprises Windows Vista; Windows XP Professional and Home; Media Center Edition; Tablet PC Edition; and other Windows operating systems.

Here's the scoop over @ Valueplays

• Market Cap 168bil.
  
• Revenue 62bil.
  
• CASH 20bil.
  
• debt 2bil.
  
• Mgmt. owns 13.3%(Bill Gates 8.5%)
  

Nam Tai Electronics(NTE) provides electronics manufacturing and design services to the telecommunications and consumer electronic products original equipment manufacturers.

This is what they are saying over at the Fool.com.

Market Cap 202mil.

Revenue 640mil.

CASH 250MIL.

debt 8.19mil

Mgmt. owns 17%

Kahn Brothers Group holds 3.84% stake. Kahn Brothers Group was started by Irving Kahn who was a teaching assistant under Benjamin Graham.

Small cap specialist Royce & Associates holds 5% stake.

Syneron Medica(ELOS) together with its subsidiaries, designs, develops, and markets aesthetic medical products based on its ELOS technology to provide aesthetic medical treatments.

• Market Cap 197mil.
  
• Revenue 139mil.
  
• CASH 120MIL.
  
• no debt
  
• Deep Value Investor Seth Klarman of the Baupost Group owns 10% stake
  
• Small cap specialist Royce & Associates holds 2.66% stake.

Author long Msft

Can Kraft Feed Buffett's Appetite?

One of Warren Buffett's stocks takes it on the chin this morning by posting a 72% decline in profits and trimming forecast for 2009. Kraft Foods(KFT) is trading down -$2.49 to $26.25 in pre-market this morning 2/4/2009. Kraft is the #2 food maker in the WORLD! Buffett usually makes Few but BIG bets and says his holding time frame is forever. I guess when you get to be the size of Berkshire Hathaway(BRKA,BRKB) you do have to hold a long time. Buffet likes companies with good steady cash flows which Kraft has and seems to be passing this on to shareholders in dividends which have been growing steadily. The current dividend is yielding over 4%. Keep in mind WALL STREET likes to focus on earnings, however the Intelligent Investor should focus on the the underlying business and its cash flows. Organic revenue for the 4 quarter and the year 2008 just ended grew 4.4% and 6.6% respectively. Here's a look at Kraft's(KFT) RECENT REPORT dated February 4th 2009.

Author long KFT