Sears' stock price keeps climbing
With no real news to justify a rally, you have to wonder if we're seeing 'the mother of all short squeezes.'
Sears Holdings (SHLD) has been an oddball stock for a long time, but this January it's just gone bonkers.
Look at what's happened in the last trading day. Shares shot up more than 10% Monday in morning trading, and finally fell back to a 3.3% loss to close at $47.39. Why? No one knows. But this action is just a normal trading day with Sears. Shares are up more than 50% so far this year.
The thing is, there's nothing going on with the company itself to justify such a rally. Sears is in the middle of closing down more than 100 stores, and the company's own financials show little investment in its future. Some suppliers aren't getting paid. The credit rating has been downgraded. Cash is dwindling.
So you get the real sense that there are other plays at work here. Manipulation. Investors trading on fear and opportunity. Short covering.
One analyst explains why she sees a short squeeze in the stock in the following video.
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It all revolves around Chairman Eddie Lampert, who already owns about 60% of the company. He's been on a massive shopping binge for Sears shares, personally buying $159 million in stock this month from his own hedge firm. Sears has been buying back huge amounts of its own shares for years, reducing the float for everyone else.
Lampert's actions helped ignite a rumor that the company might get taken private.
Finally, you have to consider that Sears might be in what The Wall Street Journal suggests is "the mother of all short squeezes." There are very few shares to short, and Sears shares are among the most expensive to borrow, the Journal reported. Short sellers borrow shares and sell them, hoping that the stock price drops enough that they can buy back the shares at a lower price and return them.
If the stock price doesn't drop -- as we're seeing with Sears this month -- some short sellers just buy back the shares and get out. And then the stock price climbs a little more.
"You gotta get out of the way of this thing now," a hedge fund manager with Rosecliff Capital told CNBC. Lampert will "do anything to keep the run going, even sell the company."
Goldman Sachs (GS) really wants this run to continue. The Journal reported that Goldman's clients invested $3.5 billion in Lampert's hedge fund about four years ago. But after Sears shares fell 57% last year, the fund -- and the Goldman investment -- has taken a huge hit.
But Goldman's clients can't withdraw their money until the end of this year, the Journal reports, so the firm is extremely interested in keeping the stock price high. Just a little added pressure on Lampert there.
Price manipulation on Wall Street ? Hard to believe such things could happen there. After all, the SEC tightly regulates such chickanery and therefore it could not possibly happen.............
lampert and his crook buddie cramer should go to jail like madoff and martha stewart
JUST NORMAL CAPITALISTS MAKING THEIR FORTUNES AT THE EXPENSE OF OTHERS
It's strange that his post was denied because it said it had a hyperlink or was spam. I re-posted it using Google Chrome instead of IE and it was accepted. MSN is such a bogus organization.
It's valued at $6.00 and it's trading for $48.00? And she says the $6.00 was being generous!!
Somebody is seriously wrong here! It can't be the market....can it? After all....the market is always the truth....right? .....not some financial analyst...right? We all know that just because 77% of the stock is held by insiders, there shouldn't be any reason to suspect that any funny business is going on....right? Because we all know that the White Knights in the business suits always do everything in an honest and honorable fashion.....right? They would never stoop to anything as low as trying to sell off an almost worthless company for 8 times its 'generous' appraisal by manipulation....right?
I've got to say this.....there is going to be some serious hell to pay when this boils over.....and I'm not talking about Sears!
Sears has become a tired old business with no lustre what-so-ever! I stopped doing business with sears years ago. I found employee attitude pathetic, merchandise and service quality even lower than mcdonalds, , , and that is saying something! Sears and the postal service are waaayyyyy overdue to go the way of montgomery-ward and the Great Lizards. The sooner, , the better!
The Stock Market is all over the charts because of this type of gambling. You can't make an informed intelligent investment anymore because of it........... it needs to stop.
PS. Cramer's a big loser. Check his record. Just another BS'r who's makes money buying stock a few days before he brags about it on his show.
Sounds like price manipulation to me. Sucking money out of the low income population that struggle to make a buck. Who authorized them to use other owners stock for a short sale.
Can I use my credit card as security on a mortgage - NO Way.
Why should they get to use something that isn't even theirs to make money.
is it still possible that de stock price will rebound and go to approx 50 dollars this week or do you see it's getting sold and the stock price will fall under the 40 dollars?
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Investors still clinging to the stock are looking to the company's founder and private equity shop Silver Lake Partners to complete their proposed buyout.
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