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Sears' Lampert Is Buying. Should You Sell?

Rich Duprey
January 14, 2013

Famed money manager Peter Lynch told us executives can sell their stock for any reason, but typically buy only for one: They think the price is going to go up!

Today I'm highlighting department store chain Sears Holdings (NASDAQ: SHLD), which saw chairman and CEO Eddie Lampert sink more than $13.5 million into its stock the other day. Now this wasn't an option grant, either, but purchases made on the open market just like you or I would do, so should we consider this a sign he thinks the retailer really is ready to jump higher?

Sears Holding snapshot

Market Cap

$4.4 billion

Revenues (TTM)

$40.1 billion

1-Year Stock Return


Return on Investment


Estimated 5-Year EPS Growth


Dividend and Yield



Edward Lampert, chairman & CEO 

Total Purchased

$13.6 million

Average Purchase Price


Recent Price


CAPS Rating (out of 5)


Source: TTM = trailing 12 months. N/A = not available; Sears doesn't pay a dividend.

Although following the lead of insiders can be profitable, I still recommend you do due diligence to determine whether this stock would make a good addition to your own portfolio. So this isn't a call to buy, but just the inside track on a company you might want to check out further.

Funhouse mirrors
It's no secret I haven't been a fan of the way Lampert has run Sears into the ground over the years since he merged it with Kmart. What initially seemed to be an opportune way to capitalize on the growing desire for discounted goods became a lesson in why hedge fund operators probably shouldn't run a retailer.

Seeking to maximize profits, Lampert neglected investing in his stores until it was way past too late, preferring instead to rely upon financial gimmicks like total return swaps and marketing stunts like "Christmas in July." And while he's calved off divisions to try to return value to shareholders, like the spinoffs of Orchard Supply and Sears Hometown & Outlet Stores, the company remains in free fall, falling further behind Wal-Mart and Target, and leaving pundits to wonder who will go under first, Sears or J.C. Penney.

Is it just coincidence that both of the latter chose similar people from outside the industry to head up their companies? Penney went with former Apple retail manager Ron Johnson, while Lampert chose someone who last headed up a telecom equipment maker.

Sears posted another adjusted loss as third quarter rev