Evan Newmark has a good analysis of Sears Holdings today. I really can’t see any reason to hold this stock: all the old reasons don’t seem to pertain any more. Eddie Lampert has given up on the idea of running it as a hedge fund, and in any case Sears is losing money, which means that Lampert can’t invest its free cash flow. The US consumer seems to have given up on spending money in general, and certainly spending money at Sears in particular. And the company’s much-vaunted real estate holdings are basically very large chunks of aging shopping malls which are looking increasingly more like liabilities than assets. I mean, who would buy those things?

Newmark reckons that the stock won’t fall much further unless and until Lampert’s buy-side buddies – people like Bill Miller and Bill Ackman – desert him. I suspect that day might not be too far off. Smart investors cut their losses, after all.

Update: Roger, in the comments (I suspect it’s Ehrenberg), points out that negative earnings do not necessarily mean negative free cash flow. He’s quite right, of course.

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