Constitution Club

Anyone have 25 million dollars that I can borrow?  I will pay it back to you in 10 years with 7.5 percent interest compounded annually.  That will net you nearly 52 million dollars in return.  10 years to double your money.  Sound like a good investment?

What if I told you that in the same time frame, I will have netted 290 million dollars and was still able to return to you double the amount of your original investment?  Of course this sounds too good to be true, but those who have invested in Lampert’s ESL Investments have enjoyed just this sort of return for the past 19 years.  This savy money manager has managed his fund to nearly a 30 percent annual return for the life of the investment vehicle. 25 million over 10 years at 30 percent interest works out to 345 million dollars. Of course, past returns do not reflect future returns, but Lampert has proven so far that his ideology works.

 According to David Faber at CNBC, Lampert is actively seeking out new investors for his ESL Investments fund.  He has tabbed Goldman Sachs to hit the road and raise between 3 and 5 billion dollars of new money for him to invest.  

Rather than raise money by pursuing his own marketing strategy, Lampert has enlisted Goldman Sachs to raise him what is expected to be between $3 and $5 billion. Goldman will essentially be doing a private placement of limited partnership units in ESL. The minimum investment is $25 million.

And the money will carry a five year lock up with six months notice due to withdraw or else you’re in for another five years. Lampert has traditionally had long lock-ups given his style of investing is to take large positions and hold them for many years.

Of course, this raises speculation that Lampert may be ready to go on a buying spree, possibly in conjunction with his other company, Sears Holdings, which has nearly 4 million in the bank right now and of course offers the possibility of using stock as an acquisition tool. 

Now, back to my original scenario.  Most people in America do not have 25 million dollars that they can lock up in a fund for at least the next 5 years.  But a person can have exposure to this investment potential through Sears Holdings.  Take a look at that 3 year chart.  Read up a bit on Lampert’s investing style.  There is still opportunity here.