Thursday, February 23, 2012

‘Cause the loser now will be later to win…

Well there you have it.  I’ve been banging my head against the wall over Sears Holdings for almost a year and half, and until recently had nothing to show for it other than significant losses.  Nonetheless, despite floundering retail operations, I continued to believe there was significant value in the brands, real estate, etc.  Here’s a quick trip down memory lane…

Starting in November 2010, I began buying call options.  Over the next 13 months, I added to my Sears position ON FIVE ADDITIONAL OCCASIONS, with the latest purchase in December of 2011.  If you’ve got some time to kill, click here ( to see all my previous commentary and real time transactions.  By the way, at year end 2011 prices, I had lost money on every single one of these purchases.

But then something happened.  Starting in 2012 Sears began to take off.  And today Sears is up an additional 20% after releasing earnings and publishing Chairman Eddie Lampert’s annual shareholder letter.  Why?  Well, I’ll let you read the letter yourself (, but in short, Sears is doing exactly what I hoped/predicted.  They are selling and distributing some of their assets and operations.  As a result, the market is starting to see Sears as a collection of valuable assets, and not just a struggling retailer.

So how will this turn out for me?  Well, as of now I have no idea, but I’m happy to say my position in Sears has turned positive, and by a healthy amount.

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Thursday, February 9, 2012

Quick Update

Yesterday I sold 10 Sears Jan 2013 $95 call options at $1.25 per contract.  If you've been following the stock, you know it's taken off in 2012.  In fact, between my call options and common stock, Sears was roughly 12% of my total portfolio coming into the year.  Before yesterday's transaction, it had gone up to 22%.  So do I think Sears is overvalued?  No, not by a long shot.  However, since it had become the single largest position in my portfolio, I figured the best thing was to be prudent and trim it back a little.

Questions?  Comments?  Email