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Lampert's Options at Citigroup
What is Eddie Lampert intending to do with his $800 million (or 0.3%) stake in Citigroup? The general consensus is that Citi is simply a value stock which fits Lampert's investing style. It certainly looks cheap, notes Chad Brand: it's trading at 10 times earnings, and yields 4%. Plus, says Brand, if Citi has problems with being big, then so does ESL, Lampert's investment vehicle:
His hedge fund is big enough that large cap stocks are the only kinds of investments that he can really take a meaningful position in without buying an entire firm.
On the other hand, Lampert might not be someone to be scared of, so much as a useful investor to be embraced as a potential source of good ideas. He's likely to be around for a while, should management be so inclined. As Bloomberg notes, "unlike many hedge funds, ESL takes large stakes in a few companies and holds them for years."
And there's always the possibility that Lampert has more aggressive moves in mind. DealBook finds one investor who hopes as much:
Mr. Lampert, chairman of the parent of the retailers Sears and Kmart, “would have the clout to make management changes,” Richard Sichel, who oversees $1.5 billion as chief investment officer of Philadelphia Trust Co., told the news service. “The market is hoping he can come in and create value in one way or another by cost cutting or finding value in the different parts.”
Lampert is certainly a rich and powerful man, but I don't think he quite has the power that Sichel attributes to him. His friendship with Bob Rubin might get him a meeting on the third floor of 399 Park Avenue. But that's probably about it.
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