Eddie Lampert is not yet a household name in America. . . but he should be. Still in his early 40s, Eddie Lampert has already amassed a net worth of well over $3.5 billion, ranking him as one of the 100 richest individuals in the U.S. (according to Forbes). Meanwhile, shareholders in his multi-billion dollar hedge fund, ESL Investments, have gone along for a sensational ride, reaping average annual gains of +29% since the fund's inception in 1988. Although not yet a household name, Lampert's fame is growing. In fact, some folks on Wall Street are even starting to call him "the next Warren Buffett". . . and for good reason. Lampert is quite simply a financial genius, and right now he's probably the closest thing to an up-and-coming investing legend that we have in America. In fact, he's so good that he earned $1.02 billion in pay last year alone, ranking him as the highest-paid hedge fund manager in history. So, why all the fuss over a guy who works in a small 15-person office in Greenwich, Connecticut? Well, Eddie Lampert provides us with the perfect example of the tremendous returns that investors can earn by searching for companies with "hidden" real estate assets. Several years ago Lampert bought a controlling stake in the the nation's third-largest discount retailer -- Kmart. The price tag? A touch under $1 billion in bankruptcy court. At first glance, that might sound like a steep price to pay for an aging retailer that had gone belly-up. But in reality, when you consider that Kmart owned significant blocks of real estate at over 1,500 prime locations across the country, the roughly $900 million price tag will almost certainly go down in history as being the most jaw-dropping blue-light special Kmart has ever offered. By the time Lampert took over the firm, investors had already left Kmart for dead. For years and years, the company had slowly crumbled under the weight of declining same-store sales, high operating costs and sluggish profits. Kmart's shareholders saw their stock values dwindle toward zero, and millions of them were furious with company management. Dustin Hoffman might have summed up their feelings best in the hit movie "Rain Man" with his famous two-word remark -- "Kmart sucks." With this as a backdrop, how on earth did Eddie Lampert figure out that Kmart was worth much more than everyone else on Wall Street thought? How did he know to take advantage of the world's greatest blue light special while other investors were bailing ship? Well, because Lampert was well aware of the importance of "hidden" assets, he was able to see beyond the firm's poor operating results. Instead of concentrating on the firm's deteriorating business outlook, Lampert focused his attention squarely on Kmart's real estate holdings. After carefully doing his homework, Lampert figured out that Kmart's real estate was worth much, much more than $1 billion. Just how much were the firm's real estate holdings worth? Well, after Kmart emerged from bankruptcy in 2003, Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million.
The end result? As you can see in my chart, shares of Kmart skyrocketed from $15 in March 2003 to highs of more than $150 by the summer of 2005. That made the stock what legendary investor Peter Lynch likes to call a "ten-bagger" in just two short years, and it vaulted Eddie Lampert onto Forbes' annual list of America's wealthiest people. But Lampert wasn't satisfied with just a ten-bagger, so his acquisition spree continued . . . In late 2004, Lampert then turned around and used the cash he generated to acquire another company with billions of dollars in "hidden" real estate assets -- Sears Holdings. And if history is any guide, then Lampert is likely to make a number of other new blockbuster deals in the coming months and years . . .
Although I'm sure you'd love to be in Eddie Lampert's shoes right now, the good news is that you don't have to purchase a controlling stake in a Fortune 500 firm to earn market-beating returns. And you certainly don't have to fork over $1 billion. All you have to do is invest in Eddie Lampert's next big acquisition target. You see . . . right now Lampert is flush with cash. According to the Wall Street Journal, his Connecticut-based hedge fund, ESL Investments, now controls over $10 billion in assets. Meanwhile, his stock holdings have gone through the roof, and his newly combined company, Sears Holdings, generated nearly $1 billion in operating cash flow last quarter. At this very moment, possibly even as you're reading this article, Eddie Lampert is putting this cash back to work by building huge positions in a number of other publicly-traded companies. For example, over the last several years he's already made over +300% on shares of one of the nation's leading auto parts retailers. And if his recent actions are any guide, then that stock is still an excellent "buy" at current levels. After all, just a few short weeks ago Lampert invested an additional $106 million in that very same company at prevailing market prices. Meanwhile, Lampert's hedge fund also owns a sizable stake in one of the country's largest auto dealership chains. And although that stock has more than doubled over the past three years, it still trades at a bargain-basement P/E of just 12X earnings. And finally, Lampert also holds a greater than 10% stake in several other publicly-traded companies. No one knows for sure what Lampert's plans are for these investments. However, if history is any guide, then these stocks are likely to skyrocket in the coming years as Lampert turns their operations around and unlocks the value of their hidden assets. As a small investor, you could earn "Lampert-like" profits in the coming months and years by simply investing in some of the very same stocks that this financial genius now owns.
Want the names and ticker symbols of Eddie Lampert's current investment holdings? Our research staff here at StreetAuthority.com just put the finishing touches on a brand new in-depth research report. In it, we introduce you to the inner workings of billionaire financier Eddie Lampert's hedge fund, ESL Investments. We also bring you a closer look Lampert's specific individual stock holdings. These include several publicly-traded companies each of which is at least 10% owned by ESL Investments. Here's a closer look at what our research staff has included in this report . . .
To gain immediate access to this research report, please click on the button below . . . Don't wait! Reserve your copy of this special in-depth research report before time runs out! But you need to act soon . . .we're making this report available FREE of charge for a limited time through this special email only. Just one good investing idea from this report could help you rack up thousands of dollars in investment gains. Best of all, it's completely free! Visit the button above to receive this in-depth research report at absolutely no charge and with zero obligation. On behalf of our entire staff here at StreetAuthority.com, I'd like to thank you for taking the time to read today's introductory analysis of billionaire hedge fund manager Eddie Lampert. Whether you choose to receive the full report or not, I sincerely hope you've benefited from today's analysis. Good investing! StreetAuthority LLC Please note that StreetAuthority, LLC is not a registered investment firm or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. StreetAuthority does not purport to tell or suggest which investment securities members or readers should buy or sell for themselves. Site users should always conduct their own research and due diligence and obtain professional advice before making any investment decision. StreetAuthority will not be liable for any loss or damage caused by a reader's reliance on information obtained in this newsletter or on our web site. Our readers are solely responsible for their own investment decisions. The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase or sale of securities. Our opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in this report should be independently verified with the companies mentioned. The editor and publisher are not responsible for errors or omissions. StreetAuthority receives no compensation of any kind from any companies that may be mentioned in our newsletters or on our web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in this report or on our web site.
|
|||||||||
That's
right, he sold 68 stores -- less than 5% of Kmart's real estate
assets -- for about the same price that he had paid for control of ALL of
Kmart's 1,500 stores and 16 distribution centers during bankruptcy
proceedings! Lampert also took measures to improve Kmart's operating
results and cash flow, leading to a string of profitable quarters for the
resurgent retailer.
How Billionaire
Financier Eddie Lampert Turned $28 Million into $10
Billion
