What a difference a few months can make. The morning Kmart announced its $10+ billion dollar acquisition of Sears, its stock soared to nearly $120 per share. Since then, sellers have come in and arbitrageurs have opened short positions. In fact, more than 11 million KMRT shares were sold short in December, up from 8.9 million in November. The stock is down 7 points this year, to its current $92 price tag.

Investors who missed out on Kmart's run from $15 to $120 are being given a second chance. Naysayers have been very vocal in dismissing the merger's touted efficiencies and warning about integration risk as the retailers seek to transform their businesses as one cohesive unit, Sears Holdings.

Buyers of the stock in the low 90's should be rewarded. Many of the shares sold short (21% of the float as of 12/8/04) will be bought back when the merger closes sometime around March of this year. Despite the claim that the combination will be little more than a larger version of a poorly run retailer, Chairman Eddie Lampert and Company will be able to improve operations meaningfully, just like they have done in the past with other retailers.

Also, don't think real estate sales are over. There continues to be hundreds of millions of dollars in value embedded in Kmart/Sears land that will be harnessed. Post-holiday sales have brought shoppers many deals in recent days, and KMRT at $92 is a prime example of how investors can grab a great deal as well.