Chronicling the end of Sears (SHLD) will be the story of my career, in all likelihood.
It wasn't too long ago (in 2007, when I crunched numbers as an analyst) that I recall shares of Sears trading well north of $150. At the height of the housing bubble, Sears was looked upon as some sort of real-estate company sitting on endless amounts of oil and natural gas reserves. In other words, Sears' real estate was probably worth north of $300 a share because it was so amazing. Talk about herd mentality.
Further, Sears CEO Eddie Lampert was seen as the next coming of the great Warren Buffett. Somehow the market believed Lampert would spin Sears' vast real estate into gold, give all the money back to shareholders and miraculously save one of the most iconic American retailers in existence. No matter if he never hawked clothes out of a car trunk as a youngin' like Macy's (M) CEO Terry Lundgren, Lampert was a can't-miss wizard.
Now, in hindsight, all of this logic seems akin to how one feels after chugging 10 boots of beer during an Octoberfest gathering -- ridiculously dumb. Shares of Sears have plunged about 94% in the past 10 years.
Today, the market is judging Sears as a dying retailer with crummy real estate (as it should). Lampert only lives through blog posts that are probably heavily edited by his handlers. As for me, I am now a journalist -- one that has probably gotten too fixated on the demise of Sears and subsequently lost sight of the fact you might be able to make a couple bucks trading this turd of a stock long from time to time.
The latest short-term money-making moment is likely now amid the pullback from the session highs on Thursday on news Sears was accepting final bids for tool-maker Craftsman. Pretty crazy that the brand, loosely being valued at $2 billion (though this can't be verified), is worth more than Sears' shares (market cap at $1.3 billion or so) -- a very relevant fun fact pointed out to me by Real Money's Jim Cramer.
Nevertheless, here is what the Craftsman news -- which was probably leaked by Sears -- has created:
1.Removes fear of suppliers cutting shipments during the all-important holiday season. Rumors had begun to pick up that suppliers (I's been hearing toy makers were getting worried) would cut back shipments due to Sears' tepid cash profile. Sears and Kmart are not going to have the cool stuff this season found at Best Buy (BBY) and Walmart (WMT) , but it will now likely have the stuff it needs to post its typical holiday sales decline instead of something more epic.
2. Signals to the market there is an appetite to buy the remaining Sears legacy brands. Suddenly, one envisions a Pep Boys (PBY) or AutoZone (AZO) stepping up to buy the carcass of Sears Auto Center (which would be re-branded). Kenmore to Samsung? Why the heck not? Diehard to some Chinese battery company or Dividend Stock Advisor holding Ford (F) ? Yeah baby!
3. Injects a small amount of confidence that Lampert still knows how to get crafty in order to save his investment in Sears (and Sears landlord Seritage (SRG) ). Is Lampert a retail CEO? No way, but he could probably extract more blood from a rock than one. And for the market, that may be OK right now.
Make no mistake, I firmly believe Sears will be out of business before the year 2020. The company is a hollowed-out zombie, with so many operational holes up and down the organization and no clear path to compete in a super-dynamic retail market. But in the near term, the market may choose to play Sears from the long side on the belief the company finishes off several big cash-raising efforts by the first half of 2017.
Good luck playing this one.
