Berkowitz is one of the best. He goes into to details on each of their investments. This is a must read for any value investor.
Regarding Sears Holdings (SHLD):”Well, we – Eddie Lampert’s overall record is still quite deep and I don’t know you know that paper trail is important, but what’s most important to us is studying, see his balance sheet, its liquidation value. I have a whole bunch of more question on Sears that are coming a little – that – (of to an) answer and we go into a bit more detail. But we’ve always shares based upon its
liquidation values and always thought that we were buying below liquidation values and we shall see. I still believe that Sears is quite reminiscent of Berkshire Hathaway’s days with the – with Warren Buffet’s days, I should say, with the Berkshire Textile Mills and that inflection point, that point when we decided it was time to move on and reallocate the cash to more productive uses. There’s nothing I see at this point which tells me that will not happen at Sears.”
Question, can Sears pay off their debt? Can they refinance at reasonable terms?
“I think – I think the answer to both questions is yes and if Eddie Lampert has any difficulties I think he should call Fairholme cause we would be willing to help him at the right price.
There is a whole section on Sears. please read it.
Fairholme 2008 Year End Conference Call
Disclosure (“none” means no position):Long SHLD
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One reply on “Fairholme Funds 2008 Year End Conference Call:A Value Investors Must Read $$”
Seems to be more emphasis on liquidation value of SHLD now than in previous comments. His comments weren’t as confident as they have been in the past.
He still refers to SHLd as a $50 billion dollar retailer with 10 Billion in inventory. The fact is that when they report their numbers for 2008 on Thursday, they will officially be a $47.5B retailer and $43B will be a reasonable estimate for 2009. Also, expect that SHLD will try to push inventory levels down to about $7B, which is what they should do in this environment, but that does affect the math of liquidation value. Cash flow will continue to shrink, especially if Sears Canada starts to labor with the economy.
Basically, SHLD is a decent Canada retailer(75% held by SHLD) and a feeble weakening American retailer. Sure, it should be worth more than $5B in liquidation, but I sure wouldn’t want to have to try to liquidate it right now.