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The Morning Brief: ESL Holding Sears Surges on Not So Bad News

The long-suffering retailer posted results that were less bad than expected, which is what passes for a win these days for Eddie Lampert's firm.

This is what passes for good news for Eddie Lampert. Shares of Sears Holdings surged 13.5 percent on Thursday, to close at $8.48, on more than five times its average trading volume after the troubled retailer reported that results in the first quarter were typically bad, but not as bad as some analysts were predicting. It reported a $2.15 per share loss, which was smaller than the consensus forecast. Revenues for the quarter came in at $4.3 billion, higher than analysts were expecting. However, this was down from $5.4 billion for the comparable quarter a year ago.

Part of the decline is due to having fewer Kmart and Sears stores in operation. But the company also reported an 11.9 percent decline in comparable store sales. Not good. Earlier this week, Lampert personally bought nearly 20,000 additional shares for $8.39 per share, which means he has made a small — very small — paper profit on these shares. Despite Thursday’s surge, the stock is still down nearly 9 percent for the year and more than 50 percent from its recent high hit last August. Shares of AutoNation, Lampert’s second largest holding, is down more than 19 percent year-to-date.

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A group of wealthy investors continues to reduce its allocations to hedge funds. Members of TIGER 21, a network of wealthy investors with more than 500 members collectively managing more than $50 billion in personal assets, increased their allocation to real estate and commodities and lowered their exposure to hedge funds, private equity funds, and fixed income in the first quarter, according to its quarterly asset allocation report.

The data is represented on a year-to-year basis but reported quarterly. The group stresses that it is best to use this data by looking at changes over time rather than at one point in time. In any case, members are now devoting 5 percent of their assets to hedge funds, tying their historical low. To put this into context, their hedge fund allocation has ranged from 5 percent to 8 percent each quarter going back to the second quarter of 2014. Real estate allocations in the first quarter of this year climbed to a new high, at 32 percent. “TIGER 21 members typically own a wide variety of assets,” the report points out. “However, a relatively large percentage of members have created their wealth in the real estate business and subsequently continue to own significant real estate portfolios.”

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Adage Capital Management boosted its stake in G-III Apparel Group by 250,000 shares. As a result, it now owns 5.34 percent of the company, which owns several well-known brands, including Donna Karan and DKNY and has fashion licenses under the Calvin Klein, Tommy Hilfiger, Kenneth Cole, and Ivanka Trump names, among many others. The investment is passive.

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