David Greising March 3, 2009
Sears Holdings Corp. Chairman Edward Lampert probably didn't expect it to turn out this way, but in writing a lengthy, policy-laden shareholders letter last week he performed what can only be described as a full Jindal.
Just as Louisiana Gov. Bobby Jindal failed to measure up while trying to rebut President Barack Obama's economic policy speech last week, Lampert displayed his wannabe status in publishing his letter just days before Berkshire Hathaway's Warren Buffett's famous annual treatise.
When Buffett's letter came out Saturday, Lampert was revealed as a pale imitation of the wise, witty and wonkish real thing.
Where Buffett astutely analyzed the complex causes and likely consequences of the current financial crisis, Lampert essentially boiled it all down to one cause and its inevitable effect. In his view, heavy-handed government interference with the all-knowing, all-powerful free markets caused the whole mess.
Buffett knows that B-school cant about the unerring wisdom of the free markets is not always right. "Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown," he wrote.
Here's Lampert's contrasting opinion: "As a believer in free markets and in capitalism's capacity to create growth and opportunity, I have been disheartened by many of the actions that occurred in the second half of 2008."
Lampert's analysis of the financial meltdown is fraught with internal contradictions. Despite his criticism of government intervention, he acknowledges that government efforts to provide and guarantee funding for struggling banks and businesses had a positive impact.
When he refers shareholders to the writings of economist Friedrich von Hayek—whose "The Road to Serfdom" and "The Fatal Conceit" are manifestos against government intervention—it's clear he is staking out a lonely position that the government last fall should have stood by and watched the economy break down. The markets, apparently, would somehow have taken care of the rest.
What this has to do with selling Kenmore washers, Craftsman tools and Lands' End clothing is anyone's guess. But then, when those washers, tools and jeans aren't moving, when profits are down 55 percent from an abysmal 2007, one can understand why Lampert is tempted to go light on details of Sears' poorly performing business when it can feel much better to rail against the evils of short sellers and mark-to-market accounting, and the unfairness of current pension-reform policies.
Buffett has waxed philosophical for years, but he has earned his soap box based on a virtually unrivaled track record in investment performance and a pretty darn good one in managing Berkshire Hathaway's portfolio of businesses. He opens his letter to shareholders, as Lampert cannot, by showing how Berkshire's stock has outperformed the broader market in all but five of the 43 years he has run the company.
Even last year, when Berkshire's stock had only its second annual decline of the Buffett era, it was down only 9.6 percent, while the broader market fell 37 percent.
Buffett also acknowledges when he has made a mistake. Amid the analysis of Berkshire's business performance, Buffett speaks of his own errors, taking the blame for an ill-timed foray into ConocoPhillips stock that has cost Berkshire shareholders several billion dollars.
And Lampert? With Sears' executive suite a revolving door and Lampert known for his bull-headed micromanagement of Sears' troubled strategy, he apparently was forced to publish a help-wanted ad in his shareholders letter.
"We encourage those who think they are up to the challenge to reach out to us to discuss opportunities at Sears Holdings," Lampert writes.
For years now, Lampert has encouraged comparisons of himself with Buffett, widely regarded as the greatest investor of recent times. It's clearer than ever that the comparison is one Lampert should stop trying to make.
Related Links
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