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Eddie Lampert is not yet a household name in America. . . but he should be. Still in his early 40s, Eddie Lampert has already amassed a net worth of well over $3.5 billion, ranking him as one of the 100 richest individuals in the U.S. (according to Forbes). Meanwhile, shareholders in his multi-billion dollar hedge fund, ESL Investments, have gone along for a sensational ride, reaping average annual gains of +29% since the fund's inception in 1988. Although not yet a household name, Lampert's fame is growing. In fact, some folks on Wall Street are even starting to call him "the next Warren Buffett". . . and for good reason. Lampert is quite simply a financial genius, and right now he's probably the closest thing to an up-and-coming investing legend that we have in America. In fact, he's so good that he earned $1.02 billion in pay last year alone, ranking him as the highest-paid hedge fund manager in history. So, why all the fuss over a guy who works in a small 15-person office in Greenwich, Connecticut? Well, Eddie Lampert provides us with the perfect example of the tremendous returns that investors can earn by searching for companies with "hidden" real estate assets. Several years ago Lampert bought a controlling stake in the the nation's third-largest discount retailer -- Kmart. The price tag? A touch under $1 billion in bankruptcy court. At first glance, that might sound like a steep price to pay for an aging retailer that had gone belly-up. But in reality, when you consider that Kmart owned significant blocks of real estate at over 1,500 prime locations across the country, the roughly $900 million price tag will almost certainly go down in history as being the most jaw-dropping blue-light special Kmart has ever offered. By the time Lampert took over the firm, investors had already left Kmart for dead. For years and years, the company had slowly crumbled under the weight of declining same-store sales, high operating costs and sluggish profits. Kmart's shareholders saw their stock values dwindle toward zero, and millions of them were furious with company management. Dustin Hoffman might have summed up their feelings best in the hit movie "Rain Man" with his famous two-word remark -- "Kmart sucks." With this as a backdrop, how on earth did Eddie Lampert figure out that Kmart was worth much more than everyone else on Wall Street thought? How did he know to take advantage of the world's greatest blue light special while other investors were bailing ship? Well, because Lampert was well aware of the importance of "hidden" assets, he was able to see beyond the firm's poor operating results. Instead of concentrating on the firm's deteriorating business outlook, Lampert focused his attention squarely on Kmart's real estate holdings. After carefully doing his homework, Lampert figured out that Kmart's real estate was worth much, much more than $1 billion. Just how much were the firm's real estate holdings worth? Well, after Kmart emerged from bankruptcy in 2003, Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million.
The end result? As you can see in my chart, shares of Kmart skyrocketed from $15 in March 2003 to highs of more than $150 by the summer of 2005. That made the stock what legendary investor Peter Lynch likes to call a "ten-bagger" in just two short years, and it vaulted Eddie Lampert onto Forbes' annual list of America's wealthiest people. But Lampert wasn't satisfied with just a ten-bagger, so his acquisition spree continued . . . In late 2004, Lampert then turned around and used the cash he generated to acquire another company with billions of dollars in "hidden" real estate assets -- Sears Holdings. And if history is any guide, then Lampert is likely to make a number of other new blockbuster deals in the coming months and years . . .
Although I'm sure you'd love to be in Eddie Lampert's shoes right now, the good news is that you don't have to purchase a controlling stake in a Fortune 500 firm to earn market-beating returns. And you certainly don't have to fork over $1 billion. All you have to do is invest in Eddie Lampert's next big acquisition target. You see . . . right now Lampert is flush with cash. According to the Wall Street Journal, his Connecticut-based hedge fund, ESL Investments, now controls over $10 billion in assets. Meanwhile, his stock holdings have gone through the roof, and his newly combined company, Sears Holdings, generated nearly $1 billion in operating cash flow last quarter. At this very moment, possibly even as you're reading this article, Eddie Lampert is putting this cash back to work by building huge positions in a number of other publicly-traded companies. For example, over the last several years he's already made over +300% on shares of one of the nation's leading auto parts retailers. And if his recent actions are any guide, then that stock is still an excellent "buy" at current levels. After all, just a few short weeks ago Lampert invested an additional $106 million in that very same company at prevailing market prices. Meanwhile, Lampert's hedge fund also owns a sizable stake in one of the country's largest auto dealership chains. And although that stock has more than doubled over the past three years, it still trades at a bargain-basement P/E of just 12X earnings. And finally, Lampert also holds a greater than 10% stake in several other publicly-traded companies. No one knows for sure what Lampert's plans are for these investments. However, if history is any guide, then these stocks are likely to skyrocket in the coming years as Lampert turns their operations around and unlocks the value of their hidden assets. As a small investor, you could earn "Lampert-like" profits in the coming months and years by simply investing in some of the very same stocks that this financial genius now owns.
Want the names and ticker symbols of Eddie Lampert's current investment holdings? Our research staff here at StreetAuthority.com just put the finishing touches on a brand new in-depth research report. In it, we introduce you to the inner workings of billionaire financier Eddie Lampert's hedge fund, ESL Investments. We also bring you a closer look Lampert's specific individual stock holdings. These include several publicly-traded companies each of which is at least 10% owned by ESL Investments. Here's a closer look at what our research staff has included in this report . . .
Want to gain immediate access to this report? Don't wait! Reserve your copy of this special in-depth research report before time runs out! Read below to learn more . . .
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What's Margin-of-Safety Investing all about? Well, this biweekly newsletter is one of our most popular products here at StreetAuthority, and for good reason -- it's devoted exclusively to the search for "Lampert-like" stocks that are trading at a steep discount to their intrinsic value. You see . . . although Eddie Lampert is undoubtedly one of the greatest investors of his time, he's not the only analyst capable of finding extremely undervalued companies . . . John DiStanislao, editor of our premium value-oriented newsletter -- Margin-of-Safety Investing -- also uses many of the same techniques to uncover companies that are trading well below the value of their assets. In fact, since he began writing for StreetAuthority back in the Spring of 2005, John has managed to identify dozens of undervalued stocks that have gained +30%, +50%, even +100% or more. Here's a quick look at just a few of those winning value-investing ideas . . .
But these certainly aren't John's only big winners. Prior to joining StreetAuthority, John DiStanislao published his analysis on his own web site for thousands of subscribers for a period of several years. In the process, John managed to identify the following winning investment ideas...
Keep in mind that these are just a few of literally hundreds of winning investment ideas John DiStanislao has managed to uncover in recent years. The reason for these solid returns is simple -- John focuses his energies exclusively on undervalued stocks that are trading well below the value of their assets. Sure . . . he isn't as well known as Eddie Lampert, and he certainly isn't a billionaire. However, John DiStanislao is without question one of the nation's leading value investors, and he's used the same techniques as Eddie Lampert to create tremendous wealth for his subscribers over the past few years. If you act today, then you can try John DiStanislao's value investing newsletter for a full year for just $49.95. Best of all, we'll give you 30 days to test drive the newsletter. If you decide to cancel anytime within those first 30 days, then we'll provide you with a full refund of your subscription price -- every single cent. And whether you choose to keep your newsletter subscription or not, you'll still get to keep our special research report -- How Eddie Lampert Turned $28 Million into $10 Billion -- as a special thank-you gift just for giving the newsletter a try. Why would we provide you with such a one-sided offer? We're absolutely convinced that once you give our Margin-of-Safety Investing newsletter a try, you'll become a subscriber for life. In our humble opinion, John's research and analysis is superior to any other value investing newsletter you'll find on the market today at any price. And best of all, it's now available for just $49.95. How has John DiStanislao managed to rack up such impressive gains? Please read on to learn more about how John finds undervalued companies with hidden assets. In the meantime, if you want to receive our free report on Eddie Lampert, and if you're ready to give our value investing newsletter a try, then please visit the link below . . .
Each and every day, John DiStanislao and our dedicated research staff spend hours and hours digging through financial statements, press releases, SEC filings and other various financial documents. During the course of this analysis, John always looks at each company's asset holdings. By honing in on a firm's real estate data, John is often able to uncover whether a prospective company owns valuable "hidden" assets. John DiStanislao uncovered one such firm back in mid-2005 -- American International Group. This firm is a holding company that owns and operates a number of subsidiaries in the oil & gas, real estate, and manufacturing industries. These include: -- A 51% stake in an oil
services firm. John DiStanislao first wrote about this firm in his Margin-of-Safety Investing newsletter back in June 2005. Here’s what the stock looked like at that time…
Although the firm's share price performance had been pretty poor up until that point, John DiStanislao believed the stock was extremely undervalued and was poised for a sharp rebound. In the research note he sent to his subscribers, John highlighted the following positives about American International: -- The firm operates a
diversified, profitable business model. Although these types of numbers are always good to see, this stock really caught John's attention when he noticed that American International was attempting to sell a piece of waterfront property at an asking price of $16.3 million. At that point in time, Wall Street was valuing the ENTIRE company at just $12 million (its enterprise value at the time), yet the firm had land for sale at an asking price of $16.3 million. And keep in mind that this land represented just ONE of the firm’s many assets (remember -- American International also owns profitable oil and gas, chemicals and plastics companies). His initial analysis was encouraging, so John then undertook a thorough review of the company’s balance sheet.
This is just one strategy that John DiStanislao uses to find firms with hidden assets -- he looks for real estate that was purchased a long time ago but is now worth far more than the value shown on the firm’s balance sheet. That was definitely the case in this example. On the balance sheet, American International's waterfront property was recorded at its historical cost of $225,000. However, that figure was significantly below the land's current market value of around $15-16 million. Knowing this, John DiStanislao then recommended this stock to his subscribers. What happened next? Well, a few weeks later American International received two cash offers of around $15 million each for the firm's waterfront property. All of a sudden, folks on Wall Street finally became aware of what John DiStanislao and his subscribers already knew -- that American International's shares were selling at a significant discount to the value of the firm's real estate assets. Not surprisingly, investors then scrambled to purchase the firm's shares, sending the stock from $5 to $10 in a matter of just a few weeks . . .
American International provides us with a classic example of the power of John DiStanislao's unique, value-oriented investing approach. Now . . . here’s the question you’re probably asking yourself at this point . . . As a small investor, how can I identify similar undervalued stocks that are trading below the value of their assets? Although you could spend countless hours searching for such firms each and every day, you certainly don't have to. For just $49.95, John DiStanislao and our dedicated research staff here at StreetAuthority will do all of the research for you, and twice per month you'll receive a comprehensive review of some of today's most undervalued stocks. It's that simple. Just one good investing idea from John DiStanislao's premium newsletter -- Margin-of-Safety Investing -- could help you rack up thousands of dollars in investment gains. In addition, if you subscribe today, then we'll also provide you with immediate access to our in-depth research report -- How Eddie Lampert Turned $28 Million into $10 Billion. Best of all, we'll send this to you as a completely free gift along with your subscription to our Margin-of-Safety Investing newsletter. Visit the button below to receive this in-depth research report at absolutely no charge, plus receive a no-obligation subscription to our Margin-of-Safety Investing newsletter.
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That's
right, he sold 68 stores -- less than 5% of Kmart's real estate
assets -- for about the same price that he had paid for control of ALL
of Kmart's 1,500 stores and 16 distribution centers during bankruptcy
proceedings! Lampert also took measures to improve Kmart's operating
results and cash flow, leading to a string of profitable quarters for
the resurgent retailer.
How
Billionaire Financier Eddie Lampert Turned $28 Million into $10
Billion
At
a price of just $49.95 -- and with a 30-day money back guarantee -- a
subscription to our biweekly value investing newsletter could be one of
the best decisions you've ever made.
