To some, hedge fund manager Eddie Scott “Crazy” Lampert might seem like an enigma. In a recent Vanity Fair article by William Cohan, we learn that it is not only friends and business associates that view him differently. The man who is on a path to running Sears Holdings into the ground was even misunderstood by his kidnappers, who held Lampert for 28 hours in handcuffs and didn’t understand the ramifications of their actions. But to understand Lampert is to recognize the repeating and conflicting patterns that have shaped his life.
Lampert made a name for himself and his hedge fund, ESL Investments, by profiting to the tune of $750 million from an investment in parts retailer AutoZone and then $1.5 billion off a stake in AutoNation, a network of car dealerships. In 2004, with an estimated net worth of $1.02 billion, he was the first Wall Street fund manager to earn over $1 billion in a single year. In 2006 he was featured on the Time 100 list most influential people in the world and was the wealthiest person in the state of Connecticut with a net worth of $3.8 billion, the height of his financial potency.
In the midst of engineering, some of the most successful stock picks in hedge fund history. However, Lampert engineered the merger of legendary mass-market retailer Sears, Roebuck, and Co. with downmarket retailer Kmart at a time when Walmart, Target, and Amazon were gaining momentum.
He didn’t know it at the time, but this was his zenith in both personal wealth and having a magic touch. His wealth would fall by almost half from its 2006 peak, now worth nearly $2 billion with assets that include a bevy of loans made to a struggling Sears Holdings, an investment he has been accused of running into the ground.
Under his tenure at Sears, where he is now CEO, and his firm owns 60% of the stock, the retailer shed more than 100,000 jobs. From the point he took over the CEO role in 2013, the combined company lost $10.4 billion and saw its revenue drop 47% at Sears and Kmart stores, many dilapidated and in disrepair, now number just 1,207 after peaking at 5,670.
Not only did Lampert potentially discover his Waterloo shortly after experiencing his most significant success, but he was also kidnapped in 2003 by a loose group of clueless young men who found him due to his success.
Renaldo Rose, a then 24-year-old ex-Marine, led a kidnapping plot after learning about Lampert’s success in the media. The gang that couldn’t shoot straight were eventually tracked down because they used Lampert’s credit card to purchase electronics and even pizza. They set Lampert free after 28 hours of being held captive at a Days Inn motel. Lampert was supposed to get the kidnappers $5 million in ransom but instead walked to the Greenwich police station, where authorities quickly tracked down and arrested the kidnappers, who were convicted soon. The incident scared Lampert, a man with many such scars. In fact, his life of tremendous highs and lows is a persistent pattern.
Lampert grew up in a lower upper-class environment in the affluent village of Roslyn, NY on the North Shore of Long Island. His father was a successful New York City attorney, and his mother stayed at home raising the kids.
While he grew up amidst affluence, the family was not independently wealthy. When Lampert was 14 his father died of a heart attack and “that was the end of camp or going away to Europe like the other children,” his mother told The Wall Street Journal in 1991.
Lampert’s mother went to work as a sales clerk at Saks Fifth Avenue on Long Island, and the family struggled to make ends meet.
Moving from one extreme to the other, Lampert, on the back of student loans, clawed his way into Yale University. Studying hard and recognizing the value of connections in elite society, he made his way into the conference that is the Skull and Bones fraternity, establishing serious relationships that would pave the way into Goldman Sachs and eventually to success managing money for wealthy individuals.
The cycle of success and failure has now led Lampert to the point where Sears Holdings stock currently trades near $2 per share, down from a $134 high 11 years ago, and Lampert is looking at the trade that might shape his legacy most squarely in the eyes — and there are few good options.
“I consider all the other alternatives, they’re not great for a lot of people, and I just want to be responsible,” he told Cohan in a rare interview. “If I didn’t believe that this company could be transformed still—the window is definitely shrinking—but if I didn’t believe that, I would try to take a different path. But I don’t know what that path exactly would be. It’s not a question of giving up or not giving up.”
Fighting for success is what defines Lampert’s life. As he faces the most challenging investment decisions of his career, Sears Holdings is teetering on life support.
