It's time to buy Eddie Lampert's Sears Holdings (SHLD)

"Sears Holdings Corp. warned investors Tuesday that its second-quarter profit could plunge to almost half that of last year as the parent of Sears Holdings and Kmart stores struggles to stay "relevant" to consumers.

Shares of Sears Holdings (SHLD) tumbled 10% to finish the session at $154.21 - wiping out all gains made since mid September. " -Sears Holdings Warns As It Struggles To Stay 'relevant'

I would start buying a small position here. Kmart was brought out from bankruptcy and merged with Sears which was all orchestrated by investing guru Eddie Lampert. He's money in the bank in my book.

The current eps is $9.87 which gives it a current earnings yield of 6.41%. If you take the current eps and compound it by 9% (analysts predict 9-10%) for 5 years and multiply it by a conservative future p/e of 15, that only gives you a future compounded rate of return of 8% for 5 years. But if you consider the Eddie Lampert factor, he has averaged annual gains of 30% a yr since 1988 with his hedge fund, ESL Investments. The growth rate estimate may be way to low.....

Sears Holdings could be the next Berkshire Hathaway where all the cash generated will be used to buy unrelated investments. If you compound the growth rate by 15%, that's a compounded rate of 14%, if it's 20%, that's compounded rate is 19% return. So you are looking at compounding rate of return ranging from 8% to 19%.

I was reading the annual report and SHLD has been buying the stock, hand over fist, about $604 million at an average price of $166.03. And of course, they have announced another $1 billion dollar buyback. If money conscious Eddie is still buying, so am I. Also Richard C. Perry bought 33 thousand shares back in Oct and bought another 250 thousand on July 1, before the stock tumble.

1-Jul-07

*250,000

SHLD

Acquisition (Non Open Market)

10-Oct-06	PERRY RICHARD C Director	13,000	Indirect	Purchase at $168.95 per share.	$2,196,350
9-Oct-06	PERRY RICHARD C Director	20,000	Indirect	Purchase at $165.03 per share.	$3,300,600