Effective 1/1/17 Sears Holdings Corporation stock fund will be closed to new investments. The company has concluded that recent changes in the law in this area have introduced new legal uncertainties and risk. Anyone have any thoughts on this? Sounds like a way to protect senior mgmt. from potential legal action when/if liquidation occurs.
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The 28b subsidiary is a myth propagated by several authors who do not understand accounting. It first showed up in a newsletter by Stansberry research, and was followed up by a couple of novice authors on SeekingAlpha. The fact is no such value exists. I will skip over the accounting complexities, but the 28b they cite is found in the footnotes of the annual report and results from internal transactions within Sears Holdings. It is also myth that the 125 "most valuable" stores were transferred to the sub. It is true 125 stores were transferred as backing for their self insurance program , but the "most valuable" wording got added in later by the authors promoting the myth.
There is some value left in the SHC property, but it's hard to estimate how much is left. We do know the company is burning the value at a furious rate just to stay afloat.
The reality
Forgive the confusion. Is this announcement stating that the employee stock plan is being discontinued or that a wider restriction will be put in place in Jan on the stock?
As mentioned the 125 properties PLUS the rights to kenmore diehard and craftsman have been ring fenced as collateral to secure a portion of the pension deficit - they won't cover the whole amount- given the number of small loans mad against real estate there ar probably circa 200 properties left without any liens tied to them- but they are likely to be the worst ones left and some will have no value - they got $2.5 billion or so for the 235 best ones so it's a stretch to say those 200 would be worth anymore than $2 billion....
I received this brochure in the mail today. Sounds like bankruptcy is in the works. I sold all of my stock back when it hit 140 a share, got out of the stock plan and have not bought any since.
So much nonsense in these posts. there are a group of stores that are fenced off, and they are held aside for the pension fund to get when this company goes under. No credible website or person thinks there's vast unrealized gains on the real estate, that's simply nonsense. Sears owns (round numbers) about 400 stores. A good chunk of them are pledged to the pension obligations or already have liens against them. Seeking Alpha has some nice articles about their value, and mostly those stores are in lousy malls or small towns. Yes, there will be some upside on a couple of dozen of them, but it won't amount to billions, or even hundred's of millions. If there were, Eddie would have monetized them rather than having to dip into his own pocket to fund a dying entity that's burning around a hundred million dollars per month in cash flow. Walking dead for sure.
I only asked since I left SHC in 01/2014 but I bought stock through the employee stock plan in 2013/2014 and had a savings plan also.
The positive thing though about owning stock is when SHC spun off Lands End I hold stock in LandsEnd which is doing better than SHC.
Thanks for the replies. Didn't get it from a link, rather sent to me via email by an associate.
This was a letter mailed out to associates. If you haven't received it, you probably will soon. I would type out the entire letter but I don't have the time. However, here's an excerpt on the second page, word for word:
**Why We Are Making This Change
The decision to make this upcoming change to the Stock Fund was made by Sears Holdings as the sponsor of and having the authority over the design of the Savings Plan. Like a number of other public companies, the company has concluded that recent changes in the law in this area have introduced new legal uncertainties and risk and make continuing the Stock Fund as-is an unacceptable business risk. Accordingly, in an effort to mitigate this potential risk, the company has determined to close the Stock Fund to future investments.
The decision to make this change should not be interpreted as any statement regarding the value or appropriateness of an investment in the company's stock. The company maintains its commitment and focus on returning to profitability and transforming around integrated retail and Shop Your Way. Associates will still have the opportunity to invest in company stock through the Associate Stock Purchase Plan or through market purchases, and existing investments in the Stock Fund may be maintained indefinitely.**
If anything, this sounds fishy. There has been a whole lot of talk about something happening in 2017 because of choice assets being free from seizure by then.
It's interesting that the best thing they can come up to assuage any employee concerns is their old and worn-out "transformation through Shop Your Way and Integrated Retail" line. In other words, we have holes in this ship but putting duct tape over them will keep it from sinking...
Every time someone, including myself, mentions this, people don't want to believe it. Sears Holdings has a subsidiary with the most valuable 125 properties in it. It is listed as collateral against lawsuits, etc. Eddie Lampert and his underlings do everything they can to not give any details about it. It has been estimated by a couple of business sites to be worth 25-30 Billion. Many of the properties have a high value because they know that once the Sears stores are gone and the properties are redeveloped, they will be worth much more than they are now. The subsidiary is immune to being seized in the event of a bankruptcy. Eddie and the other shareholders will keep all the money. that is why Bruce Berkowitz keeps buying stock and Lampert hasn't sold his. He might be planning for a bankruptcy next year and doesn't want to share the money with employee shareholders. Look for the corporation to buy back the stock now held by the fund before the end comes.
Can you post the link of where you got this info from?