Sears Holdings Corp. (SHLD), the department-store chain controlled by hedge fund manager Eddie Lampert, rose the most in almost two years after a director increased his holding in the stock.
The shares advanced 14 percent to $38.33 at the close of trading in New York for the biggest daily gain since May 1, 2012.
Thomas J. Tisch, who has been on Sears board since 2005, today disclosed the purchase of 475,000 of the retailer’s shares in the past two days. The purchases brought his holdings in the retailer to more than 933,000 shares, according to a filing.
“It’s largely up due to the news that the director purchased shares and that there’s a high short interest,” Mary Ross-Gilbert, a Los Angeles-based analyst at Imperial Capital LLC, said in a phone interview.
Short interest refers to the portion of a company’s shares that have been borrowed and then sold in an attempt to profit from a decline in the price. In Sears’s case, about 59 percent of the shares available to the public are sold short, according to data compiled by Bloomberg.
Such a high short interest magnifies gains in the stock because short sellers may be forced to buy back the stock at the higher prices to cover their bet, she said. Ross-Gilbert has the equivalent of a sell rating on Sears shares.
Lampert, who is the retailer’s chairman, chief executive officer and largest shareholder, has invested in online capabilities and the Shop Your Way rewards program to reverse a sales decline that has now stretched for 28 straight quarters. He also has sold assets and sought to shrink the company’s store base, saying retailers today need less square footage.
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