Buyer beware

I've long been skeptical of the worship of financial superstars among the set of folks whose MBA is their most cherished possession. Eddie Lampert and this latest announcement from Sears Holdings would be exhibit A in the case against such worship.

It's unclear why anyone should be impressed by a man who is systematically hollowing out formerly viable companies to enrich himself and a tiny subset of remaining shareholders. The level of re-investment in Sears (and Kmart) stores is anemic. If you've set foot in a Sears lately you'll know whereof I speak. Meanwhile, billions are being spent in buying back stock to further pump the share price over the short term. Of course, that's the point, he never has any interest in running companies successfully. The whole exercise is based on the assumption that the parts show more value as they are dismantled. A group of vultures apparently have faith in Lampert's skills in this regard as the five year stock appreciation in Sears Holdings illustrates. As soon as there is nothing left to squeeze, Lampert will sell off and head to his next slaughter. Perhaps the treads on this deteriorating jalopy are showing a bit sooner than Lampert anticipated, however. It will be interesting to see what tricks he still has left in his playbook. I'm willing to bet the word restructuring is part of it.

Lampert's own little Sears Holdings bubble will burst eventually, the only question is who will be left holding the last shares? Perhaps this is why corporations that wish to continue actually producing something and employing people construct poison pills to prevent this type of action. It's not efficient use of capital, it's simply plundering by those with the means to carry it out.