SOLD! for $2/share. (I can hardly wait to see Larry Kudlow mouth, "The Greatest Story Never Told", tomorrow. Could be one of the decade's best Pagliacci performances).
It's all darkly humorous, until you realize that it's pretty bleak to have a financial services sector with a giant, transparent aluminum albatross around its neck still ...
I have yet to read a news story that really tells the tale of what is going on. So far, it's "losses tied to subprime".
At that level of detail, it's sort-like saying, "Shh. Cancer." (or worse, "Shh. Meningitis")
Just last September - five months ago! - check out this:
Bear Stearns raised about $1 billion Thursday afternoon with an enthusiastically received surprise sale of 10-year bonds. On Wednesday, Bear shares gained 8% on speculation the firm was in talks to sell a 20% chunk of itself to an outside investor (full story). Bear chose to capitalize on that momentum and put $1 billion worth of bonds up for sale, for which it received upward of $3 billion in orders. According to TheStreet.com, the bonds will be priced at 190 basis points over comparable 10-year Treasuries.
Now, today, the buyer wants a fluffy cushion an order of magnitude larger than some were expecting? Is it all just prudence? How much is opportunism? Which do you think "the market" will discount tomorrow, no matter what you think, eh?
Update:
I suspect the news has interrupted Mr. Cayne's bridge game (more here).
| Bear’s Major Insider Shareholders | |||||
| Insider | Shares | Value (mil), 2/29/08 | Value (mil), 3/14 ($34.10) | Value (mil), 3/16 ($2.00) | Loss |
| James Cayne, Chairman | 5,612,922 | $448 | $191 | $11 | ($437) |
| Alan Schwartz, CEO | 1,026,680 | $82 | $35 | $2 | ($80) |
| Carl D. Glickman, Director | 291,542 | $23 | $10 | $1 | ($23) |
| Warren Spector, former co-president | 74,870 | $6 | $3 | $0 | ($6) |
| Sam Molinaro, CFO | 38,022 | $3 | $1 | $0 | ($3) |
| Frank Nickell, Director | 34,217 | $3 | $1 | $0 | ($3) |
| Alan Greenberg, Director | 15,000 | $1 | $1 | $0 | ($1) |
Updated from MarketJournal Listing - shares owned not independently verified
Bear employees own a lot of the company too, although you'd never guess it.
Update2:
Bear Stearns was part of S&P500 right up until the end, apparently. (oh, that'll cause them some little bit of angst)
Update3:
CIBC World Markets last rating on Bear Stearns stock appears to have been "sector perform". If they are right, hold onto your (sector) hat.
Update4:
From Friday's conference call, I think we can now guess which of these weighed most significantly in the minds of the buyers:
“I would would say on Thursday we experienced pretty broad cash outflows from a number of different sources,” including prime brokerage and repo, and also saw “mark-to-market calls on open derivatives contracts. It was from a lot of places and there was a lot of concern in the market, and we had a significant level of outflows.” - MarketJournal
Goldman Sachs looks good on the dips, yes? Is Henry Kaufman still alive to watch this, I wonder? (Wiki says yes).
Mankiw shrugs his shoulders. Will he be calm when he finds out how much of the endowment is tied up in linked transactions?
Update5: The Line is Open - A National "Fav Five"
One, Permanent Conference Call From Now Until ...? / No 3 a.m. Red Phone
On Thursday, Fed officials, including New York Fed President Timothy Geithner, Mr. Kohn, and Chairman Ben Bernanke were in regular contact with Treasury Secretary Henry Paulson and the Securities and Exchange Commission about Bear’s condition. - RealTimeJournal
Update6: MSNBC is reporting that billionaire Joe Lewis is losing billionish on his stock investment. Apart from Wilmington Trust, it appears that the Index Funds were the big holders of BSC, name Barclays, State Street, Vanguard. Oh, maybe S&P is going to get some .. eye rolls.
Update7: First class action lawsuit filed, "materially false public statements", 2:51 p.m. 3/17/08
