Bear Stearns-- the long and the short of it

Discussion in 'Trading' started by herself, Mar 22, 2008.

  1. herself


    Here in Romania (and in Bulgaria and Italy, as well, I believe), many are sceptical about the JPMorgan buy/bailout and wonder whether a group of Bear bondholders have bought BSC (common) in order to protect the value of their own bonds. My colleagues at the National do not consider presently it is prudent to take any position, long or short.
  2. It is highly unlikely that any other U.S. bank has the flexibility or strength on their balance sheet to absorb Bear and their $395 Billion dollar balance sheet. Also, you would have to trample on Paulson's ego in order to change up this deal.

    The only higher "deal" would be a "sweetened" offer by JP Morgan itself, who just made another $1.5 Billion off of the VISA IPO last week.

    JP Morgan has a $156 Billion market-cap and is run by a flat-out genius in Jamie Dimon.

    Dimon was able to get an option for $1.1 Billion on Bear's high-tech building on Madison Avenue in mid-town Manhattan should another "bidder" enter into the game. Yet another stroke of genius!

    Conceivably, Bear could be taken over by another firm, yet lose its building for all of its employees to work from.
  3. hi wags, is it true they have a lock up until 3/14 /2009? I still have a few friends there, and they were not sure if this was in fact true.
  4. Frank, I don't know anyone at Bear anymore, nor do I know how long the "lock-up" period is.

    But a recent WSJ online article claims the following:

    "And many Bear Stearns’ bankers are are least partially locked in for two reasons: the vast majority of their earnings is related to stock held up in lockups of three to five years–and employees can’t sell stock right now because of the longtime lockup periods before and after earnings announcements, and Bear is scheduled to announce earnings Monday morning. Can you say “stuck”?"


    On another note, it appears that there is some validity to the $84 "stated" book value of Bear, although I'm sure that analyst Meredith Whitney of Oppenheimer would actually know what the "tangible" book value is for Bear.

    In the meantime, it's hard to fathom the $6 billion in potential costs to JPM of doing this acquisition. Obviously, litigation will be one of them given the $2 per share price of the deal.

    Might as well put up $2 billion of that money towards a "sweetened" bid and make the deal somewhat palatable at $20 per share. That way, you cut down on angry shareholder lawsuits, or another bidder coming into the picture.
  5. Employees stuck....

    Reminds me of.....Enron!
  6. Sorry Wags I was referring to JPM's side of the deal...I've heard that they can cockblock any other offer for a year after the deal was announced...Pus they own the building...How can the SEC touch this deal...I have zero financial posistion in BSC, but wow JPM may have just bought the bottom here in respect to the sell siders.