The Retail Stock That

When financial markets closed on December 30, the final day of 2011, Sears (Nasdaq: SHLD) was trading at $31.78 a share – just a few dollars above the stock’s 52-week low. Today, Sears is trading for $76.69 a share, 143% higher than it was just over two and a half months ago. It has unquestionably been the hottest retail stock on the market in 2012.

How did that happen? How has a retail stock that wasn’t profitable last year suddenly become the best performing stock on the market? Two words: Eddie Lampert.

The billionaire hedge-fund manager who has served as chairman of the Sears board since 2005 purchased $159 million of the company’s stock back in January.  He bought 4.46 million shares of private Sears stock for $29.20 a share – just a few cents above its 52-week low. It was a savvy move by a savvy investor and – as it turns out – the exact boost Sears’ stock needed to right the ship.

Though the surge has been impressive, Sears’ stock still trails the $82.43 a share it was trading for on October 27. In fact, the recent move is just the latest in what has been a see-saw year for Sears.

Last April, the retail stock reached a 52-week high of $87.66 a share. By August the stock had fallen 40% to $52.23 a share, only to rebound back to the previously mentioned $82.43 level two months later.

Despite all its ups and downs over the last 12 months, the net result for Sears is that the stock is virtually unchanged from this same date a year ago. On March 21, 2011, Sears closed at $79.83 a share. Today – March 21, 2012 – Sears opened at $80.01 a share. The stock had gained exactly 18 cents in a year.

Sears is an iconic company run by a renowned investor. There are reasons to invest in the stock. But with $3.1 billion in losses last year and having just closed 120 stores, these are not glory days for Sears.

The credit for the stock’s recent tear goes mostly to Lampert.