Edward Lampert – $15 billion in the hands of one fund
Edward Lampert is one of the best modern managers, currently
worth over $15 billion. Lampert possesses a unique mindset and insight, and his life's work has been compared to that of such a remarkable figure as Warren Buffett.
Both investors, already 25 years old, have reached unprecedented heights, and they approach the investment process as a business, participating in the fate and management of the company, rather than from a speculative perspective.
Edward Lampert was born in 1962 in the small town of Roslyn, New York.
Edward's family was practically well off, as his father worked as a lawyer in New York City and his mother was raising two children.
So, at the age of 14, Edward began to actively work part-time as a loader in warehouses after school, but at the same time did not give up his studies and sports.
First interest in the stock exchange
As strange as it may sound, Edward's interest in the stock market and investing in stocks was instilled in him by his grandmother. They loved watching "Wall Street Week" together, where they shared sound advice on investing in high-dividend stocks.
Together, they acquired shares in leading companies like Coca-Cola with the goal of building a portfolio and living off the dividends. In an interview on a program about Edward Lampert's success, his school friends said that already in ninth grade, instead of reading funny magazines, Edward was reading quarterly company reports and focusing on analytics, studying serious financial and stock market literature .
Having saved up all his summer earnings and received a scholarship, he enrolled at Yale University, where he became an active member of the investment club. His peers were amazed by the ideas Edward proposed, as even in his first year, he was creating hedging transactions and complex investment portfolios.
Seeing the potential in this area, Edward asked to become a student of such outstanding figures as Robert Rubin (future Secretary of the Treasury) and James Tobin (Nobel Prize laureate in finance).
In 1984, Edward Lampert joined Goldman Sachs' risk management department. Even then, Edward had his own unique perspective on the market, and at his insistence, the bank reduced its stock portfolio to 30 percent, believing they were overvalued and would soon fall sharply.
After four years at the company and earning a strong reputation, Edward, at the age of 25, decided to strike out on his own and leave the company. Rubin spent a long time persuading him not to make a hasty decision, as everyone at 25 was just starting their career at the bank, while he had already achieved considerable success.
After his dismissal, Edward launched his own fund, ESL, which already had $28 million in investor funds. Richard Rainwater was his co-founder and partner, bringing in the capital. However, Richard severely limited Edward's options, so their paths soon diverged.
In his early years, Edward was an ordinary investor, never meddling in company politics and enjoying his passive income. However, he reconsidered his tactics and pulled off a truly enormous gamble, which ultimately made him a billionaire.
Thus, the largest retailer, Kmart, which was on the brink of bankruptcy, received a significant influx of funds from the fund, which helped delay its bankruptcy. The company actively dumped debt securities onto the market, which no one wanted to buy, as Kmart was considered clearly bankrupt.
However, the ESL fund buys up all the debt obligations, after which, having converted them into shares, they become the largest shareholders and owners of a controlling stake for only 1 billion, when the company’s price was valued at more than 20 billion.
Having reconsidered his investment philosophy, Edward Lampert sought to acquire controlling stakes, literally becoming a "Company Owner." This approach earned him a net worth of $15 billion and earned him a place on Forbes magazine's list of the world's richest people.
