Sears shares fall as Credit Suisse questions investor's bullish call
Sept 11 (Reuters) - Shares of Sears Holdings Corp fell as much as 6 percent after Credit Suisse questioned a bullish analysis of the retailer's real estate by an investor that had driven up the stock 20 percent in two days.
Los Angeles investment firm Baker Street Capital Management LLC, among the top 10 shareholders of Sears, had argued that Sears was sitting on prime real estate that CEO Eddie Lampert could monetize if profits and return on capital did not improve.
The analysis said at least $7.3 billion of value lies at the company's top 350 owned stores and 50 leased locations, which represent just 20 percent of Sears' total store count but account for more than 80 percent of value of its real estate assets. (http://link.reuters.com/sup92v)
Credit Suisse analysts called into question the investor's asset sale premise, saying that the top 20 percent that would have to be sold in such a scenario are the very stores that form the backbone of the company's business.
The brokerage also said the analysis does not take into consideration the costs associated with closing and laying off a large number of employees.
"The analysis ... seems to assume an orderly liquidation, getting 100 percent for inventory, very small closing costs, no more losses along the way, and so on," the analysts wrote in their note. "Unfortunately, real life has a way of disrupting that Utopia."
The analysts said the stock was prone to wide swings due to its limited free float and high short interest, noting that about 90 percent of the company's shares were held by Lampert and a few large investors and that over 14 percent of its shares were held short.
Shares of Sears, which had risen 44 percent over the last 7 trading days, were down 3 percent at $55.08 in afternoon trading on the Nasdaq.
(Reporting By Maria Ajit Thomas in Bangalore; Editing by Sreejiraj Eluvangal)