Billionaire-financier and hedge-fund king Edward “Eddie” S. Lampert, 45, operates in a world of high finance, investing in the down-and-out and the up-and-coming to seek outsize returns. His private-investment fund, ESL Investments, brought Kmart out of bankruptcy in 2003 and, a year later, merged it with another stumbling retailer, Sears, Roebuck and Co. to form Sears Holdings Corp. The merger created a retail giant, and a platform for Lampert to use for future deals. His current target: Restoration Hardware. Sears bought a 13.9% stake in the ailing home-furnishings retailer and, at presstime, was mulling over a full-out acquisition of the chain.
The idea of a Restoration Hardware acquisition hasn’t been a popular one among investors, especially given the recent performance of Sears, whose third-quarter profit fell 99%. Industry experts say that Lampert may have finally met his match in retail. But Lampert remains undiminished in his confidence and ability to turn things around. He’s betting on his own track record. Since establishing his hedge fund in 1988, Lampert has turned in average annual gains of about 30%, better than just about everyone else in the game.