This hedge fund moron, Eddie Lampert, like so many others, systematically destroyed an iconic American brand, Sears. Now he's looking to dump some of its prized and most recognized brands and assets: Kenmore Appliances and Craftsman Tools.
Lampert is psycho Ayn Rand follower. It's said that his management style for Sears, where he is CEO, is to pit the company's operating units against each another. This is how he felt the business would benefit. Not by cooperation. Not by combining talents and strengths, but rather, by canabalizing each others' businesses and profits.
Can you imagine if the military was run this way? Army against Navy. Marines against the Air Force?
Sad, but it's just another example of sick, entitled, clueless gambler with lots of money allowed to run amok and leave destruction everywhere he goes. Like they all do.
Mike,
ReplyDeleteInteresting take. A lot of people seemed eager to make the bet that Sears real-estate assets were worth way more than the stock price. In reality Sears employs a lot of people and firing everyone, even when most are doing a good job, is no easy task. Sounds like Lampert might be trying to save himself the trouble by creating such a bad environment that most people will not want to work there anymore and walk away. Shame.
I've noticed you own PSX. There has been some speculation that Berkshire might buy the whole shabang. Recently there was a snippet in a Forbes blog about how PSX pulled out of this investor day and that a possible reason could be that they are going radio silent because they might be in an SEC regulatory mode for the takeover. Any thoughts on that? I would actually be kind of bummed if they did buy it. Solid company, nice dividend, buybacks, oil going up!
I like this comment from "Blissex" elsewhere
ReplyDelete"That is very common. Now, stand back and look at the big picture from a distance.
When is doing that the best strategy? When the goal is to asset strip existing operations!
Asset stripping is the recommended strategy, in different doses, for businesses that are classified in the Bain Consulting Matrix as "cash cows" or "dogs".
The investor and executive classes have classified *entire countries* (or large regions of countries) as "cash cows" or "dogs" and set the incentives for local managers to asset strip as fast and hard as they can.
This can apply to individual companies. For example "tech" companies often don't survive long past the retirement of their initial cohort of executives. There are several reasons, but the main one is simple: they started with the company when they were 30-40, and when they reach 50-60 they switch from investing in new products and fighting for new markets, to cutting R&D and capital spending, and squeezing as hard as they can their existing customers, alienating them in the long run. Because they are not there for the long run: they want to "goose up" book profits to cash in bonuses, dividends, and their options by turning the business into a "cash cow" and asset stripping it before they retire.
Their successors then inherit what has become a "dog" business, and they see that 10 years or more of no product development and abusive customer relations mean that their best bet is to find and asset strip whatever their retired predecessors forgot to squeeze out, and effectively liquidate the company into near bankruptcy and run."