Lehman Brothers, Inc (NYSE:LEH) has recently announced its plans for the nearest future: plans how to avoid bankruptcy and save life of the company. During the last week we have seen a significant decrease in the LEH stock price. Since 08/09/08 the stock price has declined from 17.73$ (high) to 3.17$ (low), while the stock trading volume has increased dramatically. These all forces us to ask a question: will Lehman, which have once been very strong and famous bank go bankrupt? Life will show, but however there are some really inteesting signs in the current press release, which donât make us quiet but make us to think more: Read the continuation http://goldstockanalyst.net/finance-and-investing/lehman-to-be-or-not-to-be/
Chances of going out of business are pretty slim, considering that "if they do" it would start a domino effect which is bound to be stopped before it starts Just got to wonder who is the knight in shining amour unlike that of BSC, Goldman anyone
I suppose that the domino effect which you have mentioned has already started with Bear Stearns bankruptcy.
The market is telling them they do not have until the first quarter of 09 to spin out the commercial property portion. The meeting of other institutions to come up with a solution also says this. One problem with the idea is that Lehman would have to provide capital to the spin off which they do not have and it would be difficult to raise at this time. The asset management biz is valuable and rumors of $5b dollar range bids have been seen but is that enough for Lehman, I think they were wanting $10b. They are now is the position of being a forced seller and the hawks are circling overhead ready to tear chucks of flesh off its carcass. I would be careful what ever you do with its shares as there is a high likelihood they will get a fraction of what they are now or possible vanish. What I think will happen is Lehman will go chapter 11 and its counter parties will take whatâs left and write off the rest of their exposure. The only weird thing that I have noticed is that Lehman has not borrowed from the fed window since March. Do not know if this is because of lack of collateral or lack of need. I won't touch it and I hope the people who do not get hurt to bad.
I have recently discovered that Lehman 3$ and 4$ call options have significantly higher implied volatilities. I suppose this indicates that traders are willling to pay more for the calls? So, they're waiting for the rebound?