Sears Rises on Report Goldman Clients Betting with Lampert

AP

Edward Lampert

Sears Holdings jumped as much as four percent on Monday, bringing its year-to-date gain to 60 percent, following a report that Goldman Sachs and some of its clients need the stock to continue climbing to keep their investment in the hedge fund of Eddie Lampert, the retailer’s chairman, in the black.

Goldman and some clients invested more than $3.5 billion in ESL Investments four years ago and were taking a bath on that investment last year after a nearly 60 percent drop in Sears, one of the fund's largest holdings.

The rebound in Sears this year has put that investment in the fund up almost 1 percent, the Wall Street Journal said, citing people familiar with the terms of the deal.

The company secured some inventory financing from CIT group this year, but most traders cite a powerful combination of a short squeeze and speculation the stock may be sold or taken private by Lampert himself.

About 14 percent of Sears shares available for trading are sold short , or being used to bet against the company.

“You gotta get out of the way of this thing now,” said Michael Murphy, a hedge fund manager with Rosecliff Capital. With this Goldman backing, “he’ll do anything to keep the run going, even sell the company.”

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