Last January, Sears Holdings(SHLD), controlled by Eddie Lampert, spun off Orchard Supply Hardware(OSH). At the time, we were bullish on Orchard. We were wrong. Unfortunately, while the stock has plummeted, we held onto our small stake. Lampert, however has been smarter, as he has cut his stake in half over the past year. Orchard has struggled to maintain or grow sales despite pouring money into store remodelings. Profitability has remained elusive and the cash burn is bringing the company dangerously towards the liquidity precipice. Orchard was never a business Lampert wanted to be in; he’d tried to sell it off unsuccessfully several years prior to the spin. There is still the mystery of the preferred stock, but it would probably be best to follow Lampert’s lead, and leave the orchard. Disclosure: The author, unfortunately holds shares of OSH and OSHSP Related articles Pizarro: Orchard Supply Hardware planning improvement project on old San Jose store (mercurynews.com) Sears jumps after Lampert adds to stake (marketwatch.com)
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