"Today’s awful earnings announcement (from sears) confirmed the company’s many failings. But the failings of Sears also reflect the failings of Wall Street.
It is a textbook case of how Wall Street can promote a stock based on wishful thinking and myths rather than on the performance of the core business. Until the core business deteriorates to a point where even Wall Street can’t promote the stock anymore."
What the earnings announcement and subsequent media reaction really confirmed was Wall Street's myopic focus on what is easy. This is different from what is important. Little attention focuses on why someone who has allocated capital at above average returns for a prolonged period of time continues to buy back as much stock as he can get his hands on because that would be hard (and require thought).
2 comments:
Hey there.
I totally agree with your point, and I wrote up a post on my own blog yesterday with similar thoughts...
www.circleofcompetence.blogspot.com
Hi,
I agree with you as well, but as a shareholder one of my concerns is that Eddie does plan to take it private at some point. He seems very reluctant to dismantle SHLD publicly, which I can understand from the perspective that he does not want to seem like a "corporate raider". However, as currently structured SHLD is a going concern and until Eddie does something it is going to continue to flounder. I see a ton of value in SHLD based on the possibilities that the real estate and brands provide, but it does worry me a bit that ESL could decide to dismantle it out of the public eye.
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