ESL Investments

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ESL Investments is a privately owned hedge fund based in Greenwich, Connecticut and estimated to be worth over $9 billion as of 2004.[1] ESL Investments are not associated with ESL International, the stock market investment technology company. The fund is managed by Edward Lampert, who founded it in April 1988 and named it after his initials. The firm invests in the American public equity and hedging markets. Managing the fund with a contrarian investing approach, Lampert is the company's chairman and chief executive officer, and William Crowley is its president and chief operating officer.[2] ESL is fairly unique as a hedge fund in that it takes large stakes in a small number of companies and holds them for many years.[3] Most of ESL's portfolio consists of retail companies, particularly Kmart (now Sears Holdings Corporation), by far the company's largest holding (53.5% ownership as of June 2010).[4] The revenue from Kmart plays a big part in helping ESL acquire other companies.[1]

Lampert founded the fund in 1988 with initial outside investments worth $28 million. Since then, the fund has had returns averaging 29% a year. His clients include David Geffen, Michael Dell, the Tisch family (owners of Loews Corporation), and the Ziff family (owners of Ziff Davis).[1] In 2004, the fund made Lampert the first hedge fund manager ever to make more than $1 billion in a year, when the fund grew 69%, following his decision to buy Kmart and merge it with Sears.[5] At the start of the financial crisis of 2007–2010, however, ESL's retail holdings were severely affected due to a drop in consumer spending, and the company's investment in Citigroup in September 2007 saw a significant drop in value since the fund made its investment.[6] Lampert has sometimes been called "the next Warren Buffett" due to the similarities between both of their investing styles, especially that of concentrated value. Through the fund, Lampert is worth approximately $2 billion.[1] Lampert, who typically invests in undervalued stocks, is known to have modeled his investing style on Buffett's style by analyzing his annual shareholder letters.[3]

References[edit]

  1. ^ a b c d Berner, Robert; Rutledge, Susann (2004-11-22). "The Next Warren Buffett?". BusinessWeek. Retrieved 2010-06-04. 
  2. ^ "ESL Investments Inc.". BusinessWeek. Retrieved 2010-06-04. 
  3. ^ a b Weiss, Miles; DiStefano, Joseph N. (2007-05-16). "Lampert's ESL Fund Holds $800 Million Citigroup Stake (Update4)". Bloomberg. Retrieved 2010-06-04. 
  4. ^ "Sears Holdings Corp: Ownership". MSN Money. Retrieved 2010-06-04. 
  5. ^ Litterick, David (2005-05-28). "Pay packet worth $1bn makes US hedge fund manager king of the castle". The Telegraph. Retrieved 2010-06-04. 
  6. ^ Krantz, Matt (2007-11-29). "Hedge, private-equity managers bruised". ABC News. Retrieved 2010-06-04. 

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