do your own objective analysis. do you think kmart looked like a buy before lampert bought it. how about sears. he loves companies with assets and cash flow. don't listen to the negative poster's here. they show only emotion and not rationalization. he could buy home depot with it's own cash and cashflow let alone the fact he has 20 billion to invest.
lol...even if eddy could muster 20billion from his goofy hedge fund..he'd still need to borrow 80 billion in junc bonds at at least 12% to buy HD. Let's see that would require cash flow of 10 billion to service the debt. Hmmm..yep that's real smart. Meanwhile as all Searsmart's cash flow goes into HD debt payments...Searsmart falls apart even more so as it has no money to invest in itself. Eddy needs crispy creme..it's all he can afford! And he better watch out for derivatives implosion..IMO.
Lampert could not buy HD with his own cash and cash flow.
HD's market cap is now 77 billion or so. It now sells for a PE of between 11 and 12. He would have to pay about a 20% premium to the 77 billion to buy HD or about 92 billion dollars. At this time, HD would still be selling for a very reasonable PE of less than 14, even at the higher market cap of 92 billion dollars.
No man with the possible exception of Warren Buffett or Bill Gates, or another with a net worth of over 40 billion dollars could buy out HD-even using leverage.
This article seems very interesting...
Eddie Lampert's Next Move? Hearsay, Speculation and Chatter Compete for Airspace
Tuesday September 19, 6:17 am ET
Jonathan Liss submits: Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
HEARD ON THE STREET: Edward Lampert Is in the Hunt
Summary: There is speculation that Sears Holding's Corp. (NASDAQ: SHLD - News) Chairman Eddie Lampert (pictured) is trying to invest in other businesses now that Sears appears to be on sound footing. Among companies that have been mentioned as possible takeover companies for Sears are Home Depot (NYSE: HD - News) and The Gap (NYSE: GPS - News). Both companies declined to comment, saying they don't comment on market "chatter." There is also hearsay that Lampert may attempt to gain a foot in the door of the auto industry. He sold about a million shares of General Motors (NYSE: GM - News) during the first quarter and his hedge fund ESL owned about 30% of AutoZone Inc. (NYSE: AZO - News) at the end of the second quarter, for example, and approximately 24% of AutoNation Inc. (NYSE: AN - News). Lampert's moves are hard to track - he is one of a few individuals who has permission from the SEC allowing him to delay filing financial statements meaning that all Wall Street can do is wait and guess what Lampert's next move may be.
Edward Lampert is Buying Home Depot?
Posted by: gurufocus (IP Logged)
Date: September 13, 2006 09:32AM
"Home Depot is up on speculation that Eddie Lampert is building a position in the shares," said Tim Biggam, options strategist at Man Securities, an option brokerage firm in Chicago.
"This rumor has prompted enormous option volume on the call side as hot money players buy first and ask questions later."
Lampert, the hedge fund manager who brought Kmart out of bankruptcy in 2003 and engineered the takeover of Sears, Roebuck & Co last year, is chairman of Sears Holdings Corp. (Nasdaq:SHLD - news), the No. 3 U.S. retailer.