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September 13, 2006

Is Eddie Lampert Using Sears To Make A Run At Home Depot?

Tuesday's rumor has it that Eddie Lampert is putting Sears Holding (SHLD) cash to work buying Home Depot (HD) shares.

SHLD traded up on the news, and the stock has now recovered pretty much all the losses immediately post earnings. Those losses were due to either fears that (1) the share buyback would slow and Eddie would invest in something new, or that (2) earnings were below expectations.

I never felt the earnings were a miss, although they were below the high estimate on the Street, which happened to be posted by a bearish analyst. The share buyback fears were put to rest when the 10Q indicated that August saw lots of new activity. Now we get a rumored target, and the Street seems accepting. This strikes me as all pretty bullish for further gains in SHLD.

Posted by Steve Birenberg at September 13, 2006 12:52 PM in SHLD