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Morning Brief: Eddie Lampert’s Sears Bet Starts 2018 in the Red

After shares tanked last year, Sears is off to another grim start as the company announces it is shutting more than 100 stores.

  • By Michelle Celarier

The new year isn’t looking any better for Eddie Lampert and his hedge fund firm, ESL Investments, regarding a disastrous investment in Sears Holding, the retailing giant Lambert seized control of around the turn of the century.

After Sears shares tumbled 61 percent last year, they’re already down in 2018. They fell another 10 percent last week, following the company’s announcement that it would close more than 100 more Sears and Kmart stores this month. It closed 330 stores last year. Sears has had two years of sales declines and is swimming in red ink. Sears has lost 89 percent of its value over the past five years, and closed Friday at $3.48.

Lampert owns about 30 percent of its shares outstanding, and his hedge fund is also a lender to the flailing retail giant. More than 56 percent of the free-floating shares have been sold short.

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Crispin Odey’s European fund fell more than 20 percent last year, Bloomberg reported. That was the fund’s second-straight year of double-digit losses, as it fell 49.5 percent in 2016, according to Bloomberg. London-based Crispin Odey is a well-known bear who has criticized central bank monetary policy and last year predicted that the credit cycle had peaked and that China’s economic growth would start to slow, Bloomberg reported.

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HNA Group’ latest effort to buy a stake in an asset manager has floundered, Reuters reported, in what has become a series of setbacks for the Chinese conglomerate. HNA had been in talks to take a stake in Hong Kong-listed Value Partners Group, but those talks have stalled, sources told Reuters.

Over the past two years, HNA has made some $50 billion worth of acquisitions in the financial industry that have begun to bring scrutiny to the opaque and highly leveraged Chinese company. In the U.S., its pending purchase of SkyBridge Capital, the fund-of-funds firm co-founded by former Trump communications director Anthony Scaramucci, still has not closed.

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