In reality, Eddie Lampert is a true mystery to many "retail analysts" on Wall Street because they are having to evaluate a retail company that is now worth $28 Billion since the combination of Sears and K-Mart that is not merely a large retailer.  In fact, the retail efforts have recently been mixed instead of the turnarounds seen in prior quarters.  The wildcard for just analyzing this as a retailer is that this is still a large real estate holder that is deemed as undervalued on the books versus what the remaining dirt might really fetch in a true sale lease-back, and when you culminate the real estate with the point that this is really a hidden hedge fund it is mystifying. 

As long as Eddie Lampert doesn’t start to AND then continue to consistently make costly errors quarter after quarter, no one is going to say anything.  Even if they did, they don’t have the votes or shares to influence a change.  Shareholders have been so rewarded that any major hit to the stock might just make investors think there is a shot to go back in.  As long as investors feel like he is potentially the next Warren Buffett, he is virtually immune from any criticism or efforts against him. 

With the potentiality that he has been mentioned (via rumors and occasional holdings) as potentially rolling up numerous other retail related efforts, and seeing those stocks rise, he is well-heeled there AND wherever else he wants to go.  Much more money has been made investing with Eddie Lampert than against him.

Jon C. Ogg
April 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.