Edward Lampert - $15 billion in the hands of one fund

Edward Lampert is one of the best managers of our time, with an account currently worth over $15 billion. Edward Lampert has simply unique thinking and sensitivity, and his life path is in many ways compared to such an outstanding personality as Warren Buffett.

Both investors, already at the age of 25, have reached unprecedented heights, and they approach the investment process as a business, participating in the fate and management of the company, and not from the speculative side.

Edward Lampert was born in 1962 in New York state in the small town of Roslyn.

Edward's family was provided with almost everything, since his father worked as a lawyer in New York City, and his mother was raising two children.

However, unexpectedly at the age of 47, the father dies due to a heart attack, leaving the family penniless. Due to the current circumstances, the mother has to get a job as a clerk, and Edward has to accept the role of man and head of the family.

So, at the age of 14, Edward began to actively work after school as a loader in warehouses, but without giving up his studies and sports.

First interest in the stock exchange

As strange as it may sound, Edward was instilled with an interest in the stock exchange and investing in shares by his grandmother. Together they loved to watch Wall Street Week, where they gave practical advice on investing in stocks with high dividends.

So they together acquired shares of leading companies such as Coca-Cola in order to create a portfolio and live off the dividends. In an interview with one of the programs about the success of Edward Lampert, his school friends said that already in the 9th grade, instead of funny magazines, Edward read quarterly reports of companies and focused on analytics by studying serious financial and stock exchange literature .

Having collected all the money he earned in the summer and received a scholarship, he enters Yale University, where he becomes an active participant in the investment club. His peers were amazed at the ideas that Edward proposed, because already in his first years he created transactions with hedging elements and complex investment portfolios.

Seeing the prospects in this area, Edward asks to be a student of such outstanding personalities as Robert Rubin (future Secretary of the Treasury) and James Tobin (Nobel Prize laureate in finance).

In 1984, Edward Lampert joined the risk assessment department at Goldman Sachs. Even then, Edward had his own view of the market and, on his persistent initiative, the bank reduced the number of shares in the portfolio to 30 percent, since Edward considered them to be overvalued and there would soon be a strong decline.

Having worked for four years in the company and having earned strong authority, Edward, at the age of 25, decides to work for himself and leaves the company. For a very long time, Rubin tried to persuade people not to make hasty decisions, because at the age of 25 everyone was just starting a career in this bank, and he had already reached many heights.   

After his dismissal, Edward opens his own fund called ESL, which already had $28 million in investor funds. The co-founder and partner who brought the capital was Richard Rainwater. However, Richard greatly limited Edward's capabilities, so their paths soon diverged.

In the first years, Edward was an ordinary investor who never interfered with company politics and received his passive income. However, he reconsidered his tactics and pulled off a huge gamble, after which he simply became a billionaire.

Thus, the largest retail company Kmart, which was on the verge of bankruptcy, received a strong influx of funds from the fund, which helped delay bankruptcy. The company actively threw debt into the market that no one wanted to buy, since Kmart was considered clearly bankrupt.

However, the ESL fund buys up all debt obligations, after which, after converting them into shares, they become the largest shareholders and owners of a controlling stake for only 1 billion, when the company's price was estimated at more than 20 billion.

Having reconsidered his views on investing, Edward Lampert sought to buy controlling stakes and became literally a “Company Owner.” This approach earned him $15 billion and earned him a place of honor on Forbes magazine's list of the world's richest people.