thought LEH would have dropped more this morning after the BOA downgrade. "Banc of America said it now sees Lehman Bros. posting a loss of 50 cents a share in the second quarter versus a prior forecast for a profit of 76 cents a share. The firm said the large estimate cut stems from the investment bank's exposure to commercial mortgage-backed securities (CMBS) and commercial real estate." Is there anybody here who has experience in the commercial real estate market that wants to add some color on current conditions in that market?
LEH has stabilized quite a bit.....what do you folks think, will it go back to the 40s or will we get some more selling based upon scrutiny of their Level 3 assets? any experts on Level 3 assets here? Pretty hard to figure out what is an appropriate valuation of LEH.
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'Figuring out' LEH's real balance sheet or valuation isn't possible without inside information. I'll just keep a close eye on the OTM & deep OTM puts, since that's how those with the correct information would show their hand. Someone correct me if I'm wrong, but even the world's #1 top fundamental analysis expert couldn't have detected BSC's insolvency & imminent collapse by using publicly disclosed data alone.
I have read a few articles where Warren Buffet has stated that the balance sheets of these investment banks are complicated and many of them have hidden things deep inside. Warren's team couldnt value some of these banks because it was that bad.
Look, I'll say this again: it's a magnificent trading vehicle. As of right now, as I figured it would be, it's in a mild uptrend. Where will it stop? The range on a closing basis for the move down that preceded this most recent mini-rally is 36.11 to 47.52. One third, which is pretty conservative for a retracement, gets you to 39.91. The full range runs from 35 on the low side to 49.88 on the high side, for the most recent move, which was a down move, 35 having been achieved on the 27th, just a couple days ago. Round that range to 15, and you get a one-third retrace level of 40, close enough to 39.91 for government work. If you were smart/stupid enough to go long over the past couple days, you sell half of your position there, see what happens next. Good stop point might be 37.5. (Figure arrived at by triangulation, or sumthin. Wot, you think I pulled that from my arse? Believe me, I don't need to pull <i>nuthin'</i> from there. Crap just flies out. Metaphorically speaking, as it were.)
Sources say that David Einhorn (Greenlight Capital) has covered LEH short position starting from last Friday. Financial assets are always measured against interest, LEH would have to write down if interest is above 5%, but the interests are down to 2%. Should LEH issue a markup instead of write down?
I covered on the grounds that the govt and its agencies are encouraging and abetting cheating. They will just change or refuse to enforce the laws/regulations to prevent a declaration of insolvency. Against that backdrop there are better trades out there. LEH was not going to be another BSC, but rather a serial writedown/dilution play, with the writedowns delayed until after the financing to support them is in place. LEH executives can bring their children up to believe that lying and cheating is OK.
Markups are coming for everyone. We're probably in the middle of discounting that now. Not something to stand in the way of, for sure. At some point the process will be over, and the reality of low post-crisis loan and deal volumes will set in. Not quite yet though.