Ed Lampert, CEO of Sears (NASDAQ: SHLD) and renowned hedge fund operator, has put $800 million into Citigroup(NYSE:C) according to SEC filings.
No one appears to know why he bothered. According to the FT: "The disclosure prompted speculation that Mr Lampert might push for management or strategic changes at Citigroup."
It also may be that he thinks Citi is undervalued compared to competition, and that other shareholders will flog the bank's management while he sits on the sidelines and watches the value of his shares move up.
Over the last two years, Citi's shares are up about 12% while J.P Morgan's (NYSE:JPM) are up 50%. Lampert knows that market forces will not allow that delta to last much longer. Citi could replace its CEO or spin-off one or two units to shareholders or sell them to another bank. It could also aggressively cut costs to try to revive its lagging share price.
But, Lampert did not get wealthy by being slow. Citi is now caught in an endless cycle of criticism about how it has been run, and that will yield changes that help the share price, at least temporarily. And, Lampert will not need much time to cash in.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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