So today i heard a rumor about buyouts and the SEC does not let companies buy out other companies for much less than book value. After searching the SEC, I got extremely tired (literally each link you click has 500 pages of info and there are about 70 links when you search words like "buyout, book value, rules" and other stuff like that. So thought i would come here and see if anyone has any info on that. It seems like there would be a rule like that because if there wasnt, a company could sell its self and all its assets to another company for a buck and all the top guys would just buy shares of the next company and watch their value double overnight while ruining all the current shareholders. BSC book value as of last quarter was over 80 dollars per share. Although we have no clue of their books and with their writedowns last quarter giving them a loss of 800 million, lets up that and say they lost 2.5 billion this quarter (i just threw that number out of the air cause it was high and i dont think they lost that much) and are going to report that on monday. Book value would still be well over 60 per share. But i guess is Im trying to find out if the rumor is true (which it seems like it would be to protect shareholders) Does JPM or whoever else that wants to buy them have to pay a certain amount around book value of the company? Also BSC has said over and over that it was a liquidity problem they have, not a credit one. Seems like overreaction when you hear the news say BSC ran out of cash and regular joes just figure No cash= broke when thats not the case.
Fiduciary responsibility to shareholders. Competitive bidders. Jail. Lawsuits. $2.5Billion is way low in the realm of possibilities. Zero earnings. Will probably see low $20s, will likley fail, or be bought out in whole or in part, and not for anywhere close to $60.
excerpted from BARRON's website http://online.barrons.com/article/S...?mod=b_hpp_9_0002_b_online_exclusives_weekend -The options are pricing in disaster, says Steve Sosnick, a financial specialist with Interactive Brokers' Timber Hill market-making unit. -Whether or not that comes true or not it's a whole other matter, but the options are pricing that in.- -The price of Bear Stearns March at-the-money straddle suggests the stock of the fifth largest U.S. investment bank will fluctuate, up or down, by 20% between now and next Friday's expiration.- -The market tells me it's a binary event. Bear gets taken out at some higher stock level or it goes to a lower price," a senior options trader at a top investment bank said.- The implied volatility of Bear Stearns' options is outrageously high. Implied volatility spiked to about 600% this morning, and has since declined to between 200% and 300%. -I don't think we traded Standard & Poor's 500 volatility at 600% on Black Monday- when the market crashed in 1987, said Jon Najarian, co-founder of trading advisory optionmonster.com.-I don't remember ever seeing anything, nothing, like this.
My wife is a vp at BSC. She said everything was fine until the end of the day yesterday when many advisors were calling in to wire out assets. She said it was the worst end of day she ever had there and she expects it to be a hell of alot worse on Monday if they don't get a buyout.
I think Citi will be the buy of the century as soon as it flattens out or has a spike down to 10 ish (the press says 5ish, but I doubt that will happen) Regardless of its fundamentals, its the world's largest bank (or was anyway). If the Gov won't let BSC fail, no way does Citibank fail. Buy a bunch between here and 10, and park it in an IRA. No hurries, no worries. I already have, but at higher than current prices (around 28). I'm gonna buy a pile more before April 15th also. I have a buy limit at 10.50 in the mean time. This is really long term stuff, so unless it goes under, its a no brainer in my mind. BSC could still go bye bye I think though. Someone has to buy it, but they will buy it at these low prices, or lower.
Lets say I had my money with BSC but don't really follow mkt events everyday but I guess almost everyone will hear about the BSC trouble over the weekend. If I had my money with BSC and didn't take it out in those 24 hours when the liquidity problems started I would most def. be at my next BSC office on monday and take my money out. I mean I have no money with BSC but I am just wondering if thats how ppl are most likely to react on Monday. If people are afraid for their cash they won't stick around to find out how it all turns out. I guess a quick takeover would be Bsc's best solution but why would anyone pay a 40% premium when the financial sector is in so much trouble to begin with and so many deals don't even go through. Just some thoughts.
I agree. I know a guy at work who is in panic mode and will be pulling his $$$ asap from BSC to put in slices of $100K amounts in local FDIC banks. Watch the run on BSC cousins on Monday...Lehman.... PRIORITY #1 IS CAPITAL PRESERVATION
Since when options traders are good forecasting future price changes? Most option traders lose money, so much that in fact their opinions are used as a CONTRARIAN indicator. I'm not saying that BSC will go up immediately. Rather that we are near a bottom.
What about BSC earnings being pushed forward. Seems like a good reason to do this would be because they want to reassure investors. If they were to report worse than expected surely they would not move earnings forward, right?