ESL Sees Investors Pull $3.5B

Dec 6 2013 | 2:16pm ET

ESL Investments is returning more than half of its outside capital to investors, primarily clients of Goldman Sachs who invested at the height of founder Edward Lampert's renown.

Goldman clients are redeeming all of the $3.5 billion they invested in ESL in the summer of 2007—filing their requests late last year, as soon as the five-year lockup he imposed expired, The Wall Street Journal reports. Those exits, as well as that of longtime investor Michael Dell, will leave ESL with about $2.5 billion in outside capital.

ESL is paying out the redemptions, at least in part, in kind, issuing shares instead of all cash. Earlier this year, redeeming clients got shares of Sears Holdings spinoff Orchard Supply Hardware Stores, and recently got about $375 million in shares of Sears itself, where Lampert is CEO. That most recent payout cost Lampert a majority stake in the retailer.

Still, most of Lampert's longtime investors are sticking with ESL, according to the Journal. In spite of Sears' difficulties, the hedge fund posted gains both last year and this one, and has an annualized return in excess of 20% over the past 20 years.


In Depth

Electronifie: Better Bond Trading

May 11 2016 | 3:03pm ET

Technology has revolutionized countless aspects of investing and trading, but the...

Lifestyle

From Modern Trader: Stephen Curry is a Black Swan

May 18 2016 | 7:43pm ET

What do the rise of the Internet, the sinking of the Titanic, 9/11, and Stephen...

Guest Contributor

LendingClub and the Question of Internal Hedge Funds

May 19 2016 | 8:42pm ET

Peer-to-peer lending platform LendingClub Corp. has been in the news since the firm...