Tuesday, June 12, 2007

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 A Random Walk to Wealth: Eddie Lampert Wants Your Money
 Monday, June 11, 2007
Eddie Lampert Wants Your Money  (Related) 

 I have blogged many times about Eddie Lampert. First bragging about his income  (Related)   and again showing off his beautiful Connecticut home  (Related)  . Today I have news of a different variety; I learned  (Related)   that Eddie Lampert's ESL Investments is hoping to raise $3 - 5 billion USD in new investment capital. Due to Lampert's concentrated investment style in which he takes large stakes in a few companies he has placed a long holding period on the capital. There will be two successive 5 year lock-ups with one opportunity to withdraw. The minimum investment is set at $25 million. I would encourage any of my readers who have $25 million investable lying around to take Eddie up on the opportunity. Very rarely is there an opportunity to invest with a top notch manager with such a long track record of 25%+ returns. Frankly though I am a little surprised he set the investment minimum so low, if he truly wanted patient capital he could easily have set a floor of $100 million, making the investment off-limits to all but institutions, endowments, central banks and the wealthiest of families.



 Interestingly Eddie has hired Goldman Sachs to help raise the money. Seeing as he probably wants nothing to do with marketing I think that this is a smart move, though probably unneccesary. I understand why Eddie turned to Goldman; they just raised $20 billion for their buyout fund and have no problem raising large sums of money fast. But, I really don't think the problem will be raising the money I think the problem will be stemming the flow of investors who want in.



 I can think of two big investors who may want in right off the top: China and Goldman itself. It  was back in mid-May that I heard China was buying a pre-IPO stake  (Related)   in Blackstone worth some $3 billion. An investment of a few billion in ESL would seem like a logical second big move for China to diversify their foreign currency reserves and invest with one of the top hedge fund managers. After all what is $2 billion to China, a couple of days of currency reserves? It also makes sense that Goldman itself will probably take a stake. Trading and principal investments make up a full two thirds   (Related)  of their revenue and they are always looking for additional ways to put their capital to work. After all if they are willing to dump millions  (Related)   into RadioShack even after its stellar Q1 performance. Perhaps they are just caught up in the success of Radio Shack CEO Julian Day, an Eddie Lampert hire who helped bring Kmart/Sears out of bankruptcy.



 The most exciting part of this development for me is that I think that Lampert probably has a couple of ideas in the works and is looking for a little bit (cough) more capital so that he can complete them on his own. I am a huge fan of ESL and am intrigued to see what his next move is. For those of us who don't have $25 million to invest you can always pony up the $176 for a share of Sears Holdings. It isn't ESL, but its as close as you are going to get. With over $2 billion of cash on their balance sheet I'm sure Eddie will find a way to make some money with Sears.

 

Posted by The La Jolla Guy


 

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Labels:

Alternative Investments  (Related)  ,

China  (Related)  ,

Hedge Funds  (Related)  ,

Investing  (Related) 


 

1 comments:

The La Jolla Guy  (Related)  

said...

 Does anyone have more precise information on Eddie's track record with ESL? I have heard "high 20's" several times but have no concrete proof.


June 11, 2007 10:55 PM

 
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