Like clockwork, the moments a certain number of Sears shorts accumulate, a press release or a statement from Eddie Lampert unleashes a violent short squeeze, and today was just such a day.
With the short interest SHLD rising to the highest level since last October…
… Sears said a special committee started the formal process to explore the sale of various assets, including its Kenmore brand, the Sears Home Improvement Products unit as well as the Parts Direct business of the Sears Home Services division, and reported that Sears had received a proposal for these assets from ESL Investments in April.
Translated: Eddie Lampert, who is the biggest shareholder of Sears, is looking to buy the bulk of what Sears has to sell to keep the melting ice cube alive for a few more quarters. Which somehow is perfectly legal in this bizarro investing universe.
For those confused, Eddie Lampert has constructed another check-kiting scheme, whose only purpose is to bump Sears stock higher by slamming the shorts once again. And sure enough, that’s precisely what happened as Sears shares surged as much as 15% before fading some of their gains.
From the press release:
Sears Holdings Announces Initiation Of Formal Process To Explore Potential Sale Of Assets
Sears Holdings Corporation (the “Company”) (SHLD) today announced that a special committee of the board of directors (the “Board”) of the Company (the “Special Committee”) is initiating a formal process to explore the sale of its Kenmore brand and related assets, the Sears Home Improvement Products business of the Sears Home Services division and the Parts Direct business of the Sears Home Services division (collectively, the “Sale Assets”). As previously reported, the Board received a letter from ESL Investments, Inc. (“ESL”) expressing interest in participating as a purchaser of all or a portion of the Sale Assets. The Board established the Special Committee, which consists solely of independent directors, to evaluate ESL’s proposal, to actively solicit third-party interest in the Sale Assets, and to explore any other alternatives with respect to the Sale Assets that may maximize value for the Company. The Special Committee has retained Centerview Partners LLC to serve as its investment banker and Weil, Gotshal & Manges LLP to serve as its legal counsel.
All inquiries from potential third party purchasers concerning the Sale Assets should be directed to Centerview Partners LLC.
No assurances can be given that any formal detailed proposal will be made by ESL or any third party purchaser, or, if made, as to the terms and conditions of such proposal and the Sale Assets to which it relates, that any proposal made by ESL or third party purchaser regarding a proposed transaction will be recommended to the Board by the Special Committee, that definitive documentation relating to any such transaction will be executed, or that a transaction will be consummated in accordance with that documentation, if at all.
The Company does not intend to comment further with respect to the Sale Assets unless and until it determines that additional disclosure is appropriate.
As previously disclosed in our annual report, the Company is exploring ways to unlock value across a range of assets, including the Sale Assets.
But the biggest way the Company unlocks value is by launching wave after wave of short squeezes to prevent the stock of the effectively defunct company from hitting its “fair value.”
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