FORTUNE — Not all Wall Streeters are being forced to clip coupons or go without a dishwasher this year. Last week, Eddie Lampert and his family closed on a $40 million home on a private island outside of Miami. The 17,000 square-foot mansion on 2.7 acres has an “arrival court” with a long white driveway that leads you around formal hedges (not the financial kind) and a reflection pool to the front door. It’s nice.

The purchase, which will be the most expensive home bought in Dade County since 2006, may come as a surprise to anyone who followed Lampert in 2011, which wasn’t kind to the hedge funder. Lampert’s most public holding, Sears (SHLD), of which he and his funds own 60% and is also the chairman, took a beating. The retailer closed 120 stores and lost $2.4 billion in the fourth quarter of last year. Other holdings were down as well. Overall, Lampert’s largest fund ESL Investments reportedly lost 14% last year. Given his apparent screw up in Sears, some questioned whether Lampert, a storied value investor, had lost his touch.

Lately, though, Lampert has been on a hot streak. Hedge fund tracking website Insider Monkey recently ranked Lampert’s fund the best performing of the year, though that was only based on publicly available holdings. Still, the seven largest holdings in Lampert’s fund are up 30% in 2012, according to Insider Monkey. That compares to a 6.75% return for the Standard & Poors 500 in the same time.

Sears is, surprisingly, leading Lampert’s comeback. Shares of the retailer are up 131% this year. Sears’ rebound has been particularly well timed for Lampert. In early-January, Lampert purchased a $130 million stake of Sears shares for his personal investment account from his hedge fund. Bloomberg recently estimated that Lampert had a $160 million profit on that investment alone.

Lampert has made some other timely purchases. Lampert added to his stake in Seagate Technologies (STX) in the third quarter of last year. Shares of the disk drive maker are up 140% in the past six months. Another big winner for Lampert recently has been car part retailer AutoZone (AZO), which is one of Lampert’s largest holdings. AutoZone’s shares, at a recent $385, are up nearly 19% in 2012. Shares of the Gap (GPS), of which Lampert’s ESL fund is the largest outside shareholder with a 6% stake of the company, have also done well in 2012, up 30%. In fact, the sole loser among Lampert’s top holdings this year is AutoNation (AN). Shares of the car dealership chain is down 10% in 2012.

Will Lampert stay hot? That may matter on the economy. His portfolio is dominated by retailers that cater to the American middle class. So in the past few months as we have gone from talking about a double dip to a little stronger than expected recovery, Lampert’s portfolio has benefited. That has perhaps made Lampert look a little smarter than he is. Now that a better economy is built into these stocks, though, the question is whether Lampert has picked companies that can produce real growth. For Sears, in particular, that’s a big question.