Sears stock dive costs CEO a fortune

Sears Holdings CEO Edward Lampert, the billionaire financier once billed as the next Warren Buffett, has seen an estimated half a billion dollars in wealth wiped out from his personal stock holdings in the troubled retailer over the past two years or so.

Lampert’s quest to turn around Sears has proved costly, indeed.

Since he started building his stake in Sears in early 2010, the number of shares he owns has nearly doubled to 31.3 million, data from S&P Global Market Intelligence show. Lampert is Sears' second-largest shareholder, behind hedge fund Fairholme Capital Management. But if you include Sears' holdings of Lampert's hedge fund, he has the biggest exposure of all investors.

Sears' (SHLD) stock price, which is down about 95% from its 2007 peak, got crushed Wednesday after the company said it is struggling to stay in business and has “substantial doubt” as to whether it can continue as a viable retailer. The stock closed down more than 12% at $7.98 per share. The one-day selloff alone cost Lampert an estimated $35 million. 

USA TODAY estimates that the value of Lampert’s Sears stock has declined by roughly $510 million since the end of 2014. That estimate was derived by calculating the value of his Sear’s holdings at the end of each year since 2010, using Sears closing stock price for the year and the number of shares Lampert owned at the time, culled from S&P Global Market Intelligence data. Using that methodology, the highest year-end value of Lampert’s Sears holdings was $760.3 million. After today's drop his stake is down to roughly $249.8 million.

Lampert, who became CEO of Sears in early 2013, has been unable to turn Sears' fortunes around. Sales, due in part to stiff competition from retailers like Walmart as well as online retailers like Amazon.com, have been poor.

What's killing Sears and Kmart?

Forbes estimates Lampert's net worth at $1.92 billion.

His plan when he combined Sears with Kmart in 2005 was to boost the cash flows of the once-strong retail outlets and use the money to fund other investments. Lampert’s hedge fund, ESL Investments, has also suffered a financial hit from Sears' fall. At the end of February, the hedge fund owned 20.5 million Sears shares, which is less than half the stake it owned at the end of 2010, when it held 48.2 million shares. The value of the hedge fund’s current stake in Sears fell by $23 million to an estimated $163.6 million Wednesday.