Two entities controlled by hedge fund manager Edward Lampert have sold off big chunks of his firm’s main holdings to meet investors’ requests for redemptions.
ESL Investments founder Lampert has sold more than 11.1 million shares of AutoNation, bringing his total holdings down to about 38.8 million shares, or 32 percent of the total outstanding, according to a regulatory filing late Wednesday. This is down from 41.3 percent as recently as February 19 and 43.7 percent last November. Also late Wednesday, Lampert reported selling 3.3 million shares of Sears Hometown and Outlet Stores. The stock surged 45 percent last year after the retailer, which sells home appliances and gardening supplies, was spun off from Sears in mid-October.
Sears Hometown’s shares surged another 75 percent this year. However, they have plummeted 23 percent in the past 10 days after the company reported disappointing quarterly results.
Lampert has been aggressively selling shares of AutoNation, the nation’s largest auto retailer, since early 2012, when he owned more than half of the company’s shares. The stock is up more than 9 percent this year and about 52 percent since the beginning of 2011. Even after the most recent stock sales, AutoNation remains the second-largest holding in Lampert’s U.S. stock portfolio, behind Sears Holdings Corp.
Meanwhile, Lampert seemed to suffer a major setback this week when one of only eight stocks — Orchard Supply Hardware — in his very concentrated portfolio fell more than 5 percent on Wednesday. It is now down 30 percent in the first four days of the week. The company was spun off from Sears in January 2012.
On Monday the company disclosed that the prior week, the NASDAQ stock market index warned the company that it is no longer in compliance with its listing standards, which require that a majority of the board be comprised of independent directors.
But as it turns out, this is not a big setback for the hedge fund manager. At the end of the first quarter, his stake was worth only $4.1 million, which works out to just 1 percent of the value of Lampert’s total U.S. equity portfolio at that time. And although shares of Sears Holdings, his largest position, lost more than 2 percent on Wednesday, they are still up about 14 percent for the year after rising 4.7 percent on Thursday.
After all, his stock portfolio was worth $3.8 billion at year-end, even though he reported in a regulatory filing having $5.1 billion under management firmwide. Some of the difference could be in cash ready to be deployed, in bonds or in other investments that are not required to be disclosed in regulatory filings.
Lampert last year moved his 25-year-old firm from Greenwich, Connecticut, to Bay Harbour, Florida, possibly to lower his personal tax bite.
