Redemptions Cut ESL Stake In Sears

Dec 4 2013 | 1:50pm ET

ESL Investments' fourth in-kind distribution to investors has cost it a majority stake in Sears Holdings Corp.

To meet redemption requests, the hedge fund handed over 7.42 million Sears shares to departing investors, cutting its stake in the retailer from 55.4% to 48.4%. ESL founder Edward Lampert serves as Sears CEO.

The in-kind payout is the second of the year for ESL, which turned over shares in AutoNation Inc. and Orchard Supply Hardware Stores in June. The hedge fund also made in-kind redemption payments twice last year.

Paying out redemptions in kind allows ESL to avoid incurring capital gains whose taxes would fall in part on its remaining investors.

"We will continue to focus on the transformation of Sears Holdings into a membership-focused company and on creating long-term value for its shareholders," Lampert said. "My significant personal ownership in the company is a sign of my confidence and alignment with all shareholders."

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