There's a new billionaire investor on the public builder beat. Late last week, Edward S. Lampert, founder of semi-namesake ESL Investments and chairman of Sears Holdings Corp., purchased a small interest in both Centex Corp. and KB Home. According to a filing with the Securities and Exchange Commission, Lempart bought 747,600 shares of Centex and 605,000 shares of KB Home.
With the announcement, Lampert joined the ranks of Warren Buffett and Carl Icahn, becoming the latest high-powered, high-profile investor to look for a value play in the struggling public home builders. Last year, Icahn ratcheted up his interest in WCI Communities to a 14.6% stake in the beleaguered Florida company in January while Buffet claimed a position in New Jersey builder Hovnanian Enterprises in July.
Lampert, nicknamed "Fast Eddie" by folks on the Street, founded ESL Investments in 1988 at the tender age of 25. He earned his reputation as a skilled investor by consistently earning average returns of about 30% on his investments.
The investment Web site gurufocus.com characterized his investment philosophy this way: "Like Warren Buffett, Lampert targets mature and easily understandable businesses that have strong cash flows. He focuses on a company's ability to generate large amounts of cash over the long haul. Unlike Buffett, Lampert is less focused on the management team of potential because of his willingness to implement changes in the companies in which he has invested."
At the same time that Lampert bought shares of Centex and KB Home, he also purchased 1.4 million shares of mortgage lender PHH Corp. and 6 million shares of student lender SLM Corp.