Sears (SHLD) manipulates market? Stay away from the stock

Filed under: Earnings reports, Bad news, Newsletters, Sears Holdings (SHLD), Stocks to Sell

Do corporate management teams and board of directors manipulate stock prices?

You bet they do.

Despite being charged to act in the best interest of shareholders, those running publicly traded companies will often go to extremes to convince the market of value that may or may not be there.

We all remember the stories of the accounting games that were used to feed the Wall Street beat-the-estimate game. In the days of the crazy bull market, beating the number would be rewarded with huge gains in stock value.

Now those days are over, and we are in a different market and economic environment, but the temptation to manipulate a stock is still alive and well in corporate board rooms.

Case in point is Sears Holding Corporation (NASDAQ: SHLD).

The owner and operator of Sears and Kmart stores reported losses yesterday that were wider than expected. The company lost more than $1 per share on revenue of $10.7 billion.

Excluding special items, SHLD lost 90 cents versus an expectation of minus 49 cents.

The big losses in the period were widely expected. What was not expected was the company pulling future guidance given the weak economy.

Typically, such lack of confidence in the future is met with skepticism by the market. Perhaps that is why in announcing the news SHLD also mentioned that it would start buying back up to $500 million of stock.

Now why would they go and make that statement, especially at a time when cash is king?

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Sears (SHLD) manipulates market? Stay away from the stock originally appeared on BloggingStocks on Wed, 03 Dec 2008 17:00:00 EST. Please see our terms for use of feeds.

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