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No. of Recommendations: 5
For anyone who thinks Sears is going to stay in business,
the share price is at the lowest it has been since around May 2009 at $51.17.

Again, if you believe they will stay in business, the puts are wonderful.
The Jan 2013 $50's are bid around $15, and $40's around $10---a little hard to
tell because the recent spinoff has made all the option contracts a bit wonky.
As the Orchard Supply deal hasn't happened yet, I think the figures are OK.
It's just that the deliverable is odd: some Sears shares and some Orchard shares.
After the spinoff life will be easier!

Heck, for those who don't think they'll stay in business, the case might be stronger.
Assuming they don't hurry at all, the liquidation of assets should
return far more than the current share price.
In a panic less so, but they are very nearly a going concern, so even
if they decided to wind down it's unlikely to be as a big bang.

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No. of Recommendations: 9
Long bonds are trading at $0.60 on the dollar depending on issue, YTMs above 12-13%. More attractive than short puts IMO due to the more senior claim in liquidation, and participation in the upside if the situation turns around.

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No. of Recommendations: 1
i guess a better question is whether equity is worth anything if the long bonds are trading at 60c on the $. how can the bulls be still so confident that the "liquidation" value will be much higher? based on cherry-pick transactions in '07 (neither buyer is on the market now btw)? how much has commerical real estate come down? how much pent-up investments do new occupiers need to put in given the consistent gap between capex and D&A?

at current trajectory, this company will be in a cash crunch very soon.
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No. of Recommendations: 0
How dare you question the Bulls' ability to pick up quarters in front of steam-rollers?
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No. of Recommendations: 1
The question I have long wondered about it why Lampert repurchased shares in SHLD so aggressively over the past few years. It was such a massively concentrated bet for him already before effectively doubling down via the repurchases.

It didn't make sense for him to to do that if it is based on a retail turnaround that might or might not have worked, you would think he would only do that if he was highly confident that the liquidation value was far higher than the stock price.

Maybe what happened is that he was perpetually overestimating the liquidation value and that has shrunk over time to a decrease in the value of the real estate. Or maybe he wins in the end, although hard to see how. Very interesting stuff, either way. It would make a fascinating book if anyone could ever get access.
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