ESL Investments
Encyclopedia
ESL Investments is a privately owned hedge fund
based in Greenwich
, Connecticut
and estimated to be worth over $9 billion as of 2004. ESL Investments are not associated with ESL International, the stock market investment technology company. The fund is managed by Edward Lampert
, who found 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. 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. 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). The revenue from Kmart plays a big part in helping ESL acquire other companies.
Lampert found 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
). 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. 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. 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. 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.
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
based in Greenwich
Greenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
, Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
and estimated to be worth over $9 billion as of 2004. ESL Investments are not associated with ESL International, the stock market investment technology company. The fund is managed by Edward Lampert
Edward Lampert
Edward S. "Eddie" Lampert is an American businessman and investor. He is the chairman of Sears Holdings Corporation and founder, chairman, and CEO of ESL Investments. Until May, 2007 he was a director of AutoNation, Inc. He previously served as a director of AutoZone, Inc...
, who found 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
Contrarian investing
In finance, a contrarian is one who attempts to profit by investing in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong....
approach, Lampert is the company's chairman and chief executive officer, and William Crowley is its president and chief operating officer. 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. Most of ESL's portfolio consists of retail companies, particularly Kmart
Kmart
Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and...
(now Sears Holdings Corporation
Sears Holdings Corporation
Sears Holdings Corporation is a retail conglomerate formed in 2005 by the merger of Sears, Roebuck and Co., of Hoffman Estates, Illinois, with Kmart Holdings Corporation, of Troy, Michigan...
), by far the company's largest holding (53.5% ownership as of June 2010). The revenue from Kmart plays a big part in helping ESL acquire other companies.
Lampert found 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
David Geffen
David Geffen is an American record executive, film producer, theatrical producer and philanthropist. Geffen is noted for creating Asylum Records in 1970, Geffen Records in 1980, and DGC Records in 1990...
, Michael Dell
Michael Dell
Michael Saul Dell is an American business magnate and the founder, chairman and chief executive officer of Dell Inc. He is the 44th richest person in the world, with a net worth of US$14.6 billion in 2011, based primarily on the 243.35 million shares of Dell stock worth $3.5 billion that he owns,...
, the Tisch family (owners of Loews Corporation
Loews Corporation
Loews Corporation is a holding company run by the Tisch Family whose subsidiaries are engaged in the following lines of business:*property and casualty insurance...
), and the Ziff family (owners of Ziff Davis
Ziff Davis
Ziff Davis Inc. is an American publisher and Internet company. It was founded in 1927 in Chicago by William B. Ziff, Sr. and Bernard G. Davis. Throughout most of its history, it was a publisher of hobbyist magazines, often ones devoted to expensive, advertiser-rich hobbies such as cars,...
). 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. 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
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
in September 2007 saw a significant drop in value since the fund made its investment. Lampert has sometimes been called "the next Warren Buffett
Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...
" due to the similarities between both of their investing styles, especially that of concentrated value. Through the fund, Lampert is worth approximately $2 billion. 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.