Not so long ago, Sears (NYSE: SHLD) had become something of a value glamor stock. Journalists waxed about hedge fund manager-turned-Sears chairman Eddie Lampert's plan to turn the company into an investment vehicle -- comparisons to Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) were ubiquitous.

After yet another terrible quarter, Sears is down nearly 50% from its 52-week high, Herb Greenberg has even suggested that CEO Alwyn Lewis could be shoo-in for his Worst CEO of the Year Award.

Lampert's reputation as Sears chairman has gone from the penthouse to the outhouse pretty quickly, and he's not too happy. In fact, he's lashing out at critics. In a letter to employees on Friday, he wrote that:

While we were not pleased with these results, much of the commentary in the media and on Wall Street following the results ignores the strength of our company and the progress that we have made . . .

Ed Lampert built his reputation as a big-time hedge fund manager. He then took control of Sears Holdings (NASDAQ: SHLD) and bought K-Mart. That did not work out very well. Shares in Sears are down 25% this year and trade around their 52-week low.

The whole Sears thing is obviously embarrassing for someone who is used to making himself and his investors billions of dollars.

Lampert figured that since retail was not working out, he would try his hand at investing in banking. It seemed like a good idea. How much can go wrong with a big bank? Citigroup (NYSE: C)'s shares were under-performing the market in the middle of the year, so Lampert built up a stake of $1.3 billion, according to The New York Times. The shares are held by "RBS Partners, an affiliate of Mr. Lampert's ESL Investments."

Things have not gone well at Citi, so Mr. Lampert has lost about $471 million since late June.

Is there a lesson here? Probably nothing beyond the fact that smart people sometimes do stupid things.

Douglas A. McIntyre is an editor at 247wallst.com.

Sears Holdings (NYSE: SHLD) had been on a tear for the past few years, as investors were buoyed by hopes that hedge fund manager/CEO Ed Lampert could do great things with the company -- possibly even make it the next Berkshire Hathaway (NYSE: BRK.A).

But Sears under Lampert has not been without its detractors, who fear that the company is neglecting its flagship retail stores to focus on non-retail investments. Back in June, Julie Tilsner wrote about Why Sears Stinks, and the stock has stunk since that time too -- big time. But Barron's thinks that there may be value here -- and that Sears' weak operating performance could push Lampert to unlock value sooner. His hedge fund owns 45% of the company:

Likewise, Sears' business is getting short shrift, as some of Lampert's restructuring efforts are likely to bear fruit. Too, the retailer's real estate has considerable value that is not reflected in the stock. Add up this real estate, valuable brands like Kenmore and Craftsman, and Sears' huge appliance and home-remodeling business, and the company could have a liquidation value of more than $300 a share. The worse Sears performs in the next year or so, the more likely Lampert is to monetize and harvest this potential real-estate bonanza.

If Sears' liquidation value really is that high, it looks like a no-brainer buy here at $130. Getting a manager with Lampert's track record -- and a huge personal stake in the company -- in the executive suite at a fraction of liquidation value is intriguing.

The uncertainty surrounding Sears' retail operations could be a case of optionality at its finest.

AutoZone, Inc. (NYSE: AZO) implied volatility elevated into mid September earnings per share (EPS) and outlook: AutoZone is expected to report earnings per share on September 18. AZO management will be speaking at Goldman Sachs Group, Inc. (NYSE: GS) 14th Annual Retailing Conference on September 6. AZO September option implied volatility of 36 is above its 26-week average of 25, according to Track Data, suggesting larger price risks.

Cisco Systems, Inc. (NYSE: CSCO) implied volatility flat into September 5 analyst meeting: Cisco is recently up 40 cents to $31.83. CSCO will be holding an analyst meeting in San Jose, CA, on September 5. BAMO says, "we believe the meeting will be used to showcase CSCO's growing technology platform and emphasize the company's mantra of the network as the IT platform." CSCO September option implied volatility of 26 is near its 26-week average of 28, according to Track Data, suggesting non-directional risk.

Daily options update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

The New York Times DealBook wondered about the performance of Eddie Lampert: Both his hedge fund, and its major holding and the company that he runs, Sears Holdings Corporation (NYSE: SHLD) seem to be scuffling.

But I doubt that Lampert is too worried. As one of the few investors who has earned the distinction of frequent comparisons to Warren Buffett, Lampert has doubtless learned not to pay attention to the short-term gyrations of the market. His sophisticated hedge fund investors shouldn't worry, and they probably aren't. But shareholders in Sears may be in a different situation. DealBook has an interesting quote from a consultant:

"Lampert continues to do financial machinations rather than focusing on the stores," Steven Keith Platt, founder of Platt Retail Institute, a retail market research and consulting firm, told The Tribune. "Why doesn't he take that $1 billion and put it into the stores? The guy is great at propping up the price of the stock. He's not a retailer."

Sears' flagship stores aren't doing so well. Actually, I would argue that they're in the toilet. BloggingStocks' Julie Tilsner wrote an insightful piece that explains everything that's wrong with the company from a retailing perspective. Rather than tackling the company's operational problems Lampert has, as Platt points out, acted like a hedge fund manager and focused on financial maneuvers. But is that bad?

Sears has taken a beaten in recent months, and is down another 2% today. Investors are realizing that the stores are in trouble, but here's the question: Is Sears valuable as a Berkshire Hathaway-esque holding company with Lampert at the helm, and the underperformance of the stores presents a buying opportunity? Selling shares of Berkshire Hathaway years ago because the mills were underperforming would have been a mistake -- the mistake of a lifetime.

Sears looks cheap from a value perspective and, given Lampert's prowess as investor, it may be worth overlooking the struggling stores. This is Sears only in name, and a bet on Sears is really a bet on Lampert as a deployer of capital. Given his track record at ESL, that's a bet that may be worth making.