Kenneth Heebner Cashes In Big on Countrywide, Sears Short Sales

For every person that is losing money in equities such as Countrywide and Sears, there is someone on the other side, raking in the cash.

One is those people is Kenneth Heebner, manager of the CGM Focus Fund.

According to a November 21st regulatory filing, CGM Focus reported that they were currently short over 12 million shares of CFC and 1.3 million shares of Sears Holding Corp. Based on my rough calculations, that would be a gain of over $200 million dollars if he decided to cover the short positions today.

Both short positions stem from Mr. Heebner's theory that we are in the midst of the worst housing decline since the Great Depression in the United States. Shorting the country's largest mortgage provider obviously makes sense, but why short Sears as well? Sears sells much in the way of home furnishings, appliances, etc. So Kenneth Heebner's (correct) theory was that if home values were in decline, not only would there be less new home purchases and new homes being built, but existing homeowners would be pinching their pennies as well. This is exactly what has happened with Sears, and the CGM Focus fund has profited handsomely because of it.

Filed under: The Economic Meltdown | General Knowledge