Well I just know having confidence in your bank is paramount. Look at Northern Rock where ppl were standing in line to get their money out until they wre taken over by the british government. I admit I always thought that if a stock goes down 50% or so my first instinct is always its not that bad and its a clear buy. Last time I was thinking that was with WCG. It dropped to $55 or so just to see it go down into the 20's a few days later. Same with all these banks like citigroup. Alot of people said at $30 its so cheap and that must be the bottom. Then they said it again at $25 and again at $20. I have no doubt that they will call the bottom eventually because if u say its the bottom every few dollars lower you have to be right eventually and thats when u look like a genius. I am not saying that BSC cant go up huge next week. All I am saying that 100% of the people who called a bottom in these financial stocks after a big one day drop or the steadily decline were wrong for the last several months. That said I am really looking forward to see how it all turns out in the end P.S. I think I learned that if people agree its the the bottom in 99% of the cases its not the bottom.
Right on. You nailed it with WCG. I know we can't make comparisons to a major investment and some healthcare FBI raid. But for price action alone on $100 plus tickers that drop like this, it is SO tempting to jump in for the quick trade. I remember that drop from $110 to $55. Then it dropped to $22 or something and rebounded fast and hard to the upside. I caught a little of that run but was scared shitless of a halt and bailed. I think it went back to $40 something +...
I have no idea if there is such SEC rule against buyouts bellow book value. but regardless I dont think the rule would be enforced if the financial system is in danger. if the bidder wont pay more than 0.8x book or such, chances are bernanke would give cox a call and he would look the other way about any rule
Everyones comparing BSC with the guys that did bad after their stock dropped. Lets compare with other guys. Ok...buying stock in china is pretty scary right now cause people think that there are some scam companies out there. Look at CFSG this week. That billionaire Cuban went out and questioned their integrity with this share slueth website and the stock dropped almost 50% in 1 day. 4 days later, the stock is 90% recovered. Thats how fast investor confidence can come back. Ok lets look at something more local. Phillip morris. MO got sued for 1/5 of a TRILLION (that right, with a capital T, TRILLION!!!) dollars. Stock went from 60 to below 20. What happened to those investors that bought at 20? Oh they got in started collecting a 10%+ dividend watched their stock climb into the 70s as of today...Oh and they picked up what was it...68 shares of KFT (that usually trades in the 30-35 range) for every 100 shares of MO they had, NOT to mention they are picking up another divy from KFT. People were SURE that MO was going out of business...nobody could take a 200+ billion dollar hit could they? Ok lets look at another company. FRO (its a company that ships oil and they are the biggest one) There was talk about Bankrupcty and the stock over a few months dropped from 15 to 3.75 at its low in 2002 (i believe it was) From 2003 to this year they have paid out over 62 dollars in dividends and enjoy a price that trades in the 45 dollar range. The 5 bagger stocks are always the low cap up and coming guys, sometimes its the distressed big companies that pay out big time. People never remember the stocks that pulled themselves out of a mess, they only remember the ones that went belly up. Obviously there is some value if there are several different guys looking at buying Bear and I can tell you that if i was bear sterns and holding the weak hand that i was, this is what i would do. Soon as there was an offer (say the offer is 38) Before accepting, i would put out a press release saying they were considering one of the offers of the few that they were getting and let it "slip" that the lowest offer was 38 by JPM or whoever. Stock would fly to 38 almost instantly and then you got 30 million shorts wondering if there is another offer around the corner at 45 so they are covering pushing the price up. Bear says, "we cant take a 38 offer now...price is too high. Before you know it, you got a nabisco bidding war on your hands and the stock is flying out of control. Obviously It would have to be done with a little more finesse than the way i just described it, but it is doable.
The clearing business has value, but for many other business lines it is cheaper to poach stars than buy a lot of duplicate businesses. No institution can justify having funds with BSC now, its all downside risk, no upside to do that. No clients, no business, whereas with MO for examle, people will still smoke. As for book value, I don't think stated book value including Level 3 assets is reliable. I see a Fed brokered takeover to avoid a failure. Fact is the gummint is not going to allow banks to fail. We have seen FASB 157 delayed for a years, AAA ratings For MBI and ABK and a complete REFUSAL to downgrade AAA bonds that are defaulting but are also part of the ABX index. Fed cutting rates so that banks can improve spread etc etc. I covered shorts in financials on the BSC news as I saw more resilience than I would have expected. I think there are better shorts out there as the gummint is not going to allow ANY financials to fail and can hold the market up for a while. If necessary they will pass an emergency decree making it OK to operate a bank with negative equity etc (a bankrupt banking system would weaken US position in the war against "terror" etc). Total and utter distortion of the free functioning of the markets and outright lies from rating agencies. I don't think a collpase of the fractional reserve banking system is a good idea but we are getting all these inflationary actions because banks that were bankrupt did not want to accept the 'stigma' of de facto admitting they were bankrupt by using the discount facility, so we all have to pay so people who ran their business into bankruptcy can avoid a stigma. If the "Federal" Reserve actually was the institution it pretends to be and Bernanke were not such a poodle/puppet the answer would have been to tell the banks if you need liquidity it is available at the discount window and at a price that allows your business to function but NOT to make a positive spread on the borrowing. Instead they cut rates and we are all paying so banks can pocket the gift spread and not pass on the lower rates. If there is mo marking down of asets and no clearing thane you will have a 10 year recession. That seems to be the most likely scenario, although pressure will mount to do what has to be done as this grinds on year after year. Fed strategy of buying time is flawed, it is like waiting for Pets.com to return to 99 values and make everyone whole agibn. Housing is not going to recover to last peaks levels in any reasonable timeframe I avoid bank borrowings, but I gather bank clients who have problems do not recieve the largesse that the banks expect from the people. Americas founding forefathers must be turning in their graves.
RBS, J.C. Flowers Interested in Buying Bear Stearns, NYT Says http://www.bloomberg.com/apps/news?pid=20601087&sid=aOBRMPaTe0lQ&refer=home
They will have to be quick or there will be nothing to buy - and JPM will get it for $1. To a commercial bank with Investment Banking asirations and no IB presence buying a US bulge bracket IB makes sense until the honeymoon period is over and clash of cultures becomes aparent. As for J.C. flowers it just confirms that private equity players have more money than sense.
this is not true. BAC is buying CFC for $7 and there book value i think is around $20. book value is worthless right now for finance companies and home builders. 2 industries where book value usually is an important metric during normal times
A sale of substantially all of the assets of a corporation or the merger of one corporation into another is governed by the corporate law of the state of incorporation, not the SEC. Undoubtedly, BSC was incorporated in Delaware, thus Delaware state law will apply. See sub-chapters IX and X. http://delcode.delaware.gov/title8/c001/index.shtml#P-1_0 Bottom line: shareholders have to approve the transaction.
interesting that the Fed and BSC couldn't keep this whole mess under wraps until Friday's close.. I wonder if there will be a massive run on the whole system Monday