Lehman tipped 'buy' Northern Rock all the way down

Discussion in 'Wall St. News' started by THE-BEAKER, Sep 18, 2007.

  1. nice one lehman you bunch of cocks.

    just a few hours before it went under they are telling everyone to pile in and go long.

    The advice from the trader at Lehman Brothers was unequivocal: "One final tip. Load up on NRK [Northern Rock] for your children, your Mum, your goldfish... it is not going bust, gives an excellent yield, is cheap and is a realistic takeover target – buy it now."

    But within hours of the trader urging investors to buy, shares in Northern Rock went into freefall as the beleaguered bank admitted that it had been forced to turn to the Bank of England for emergency funding. The shares have since halved in value.

    Yesterday the email, written by an unidentified trader at the investment bank, was circling the City. "This is a classic.?.?. some poor guy sent this out on Thursday night," wrote one fund manager at the top of the email.

    Lehman Brothers was desperately trying to distance itself from the email yesterday, insisting the note had been written by a junior trader and had been circled to a limited number of clients. "It does not, and did not, represent the Lehman Brothers view," a spokesman said.

    But it is not just junior traders who have red faces after the dramatic plunge in Northern Rock. A number of senior City analysts, who are supposed to write more thoughtful research than their colleagues on the trading desk, have also been left red-faced after the collapse in the Northern Rock share price, further denting public confidence in City analysts.

    Shares in Northern Rock, long a stock-market darling, rose 325pc between 2000 and 2007, from 294p to a £12.51 high on February 9 2007. But amid increasing concerns about the bank's business model, they have since been on the slide. While some analysts saw the writing on the wall (Jonathan Pierce at Credit Suisse has urged investors to sell on 10 separate occasions since January) Northern Rock's City cheerleaders have repeated their "buy" advice all the way down.

    Analysis by the news service Bloomberg found that James Huston, a leading banking analyst at the boutique broker Keefe, Bruyette & Woods, recommended buying Northern Rock on seven separate occasions this year. Last week KBW reiterated its "buy" advice with a target price of 1,000p. Shares in Northern Rock closed yesterday at 287p, down almost 35pc.

    Even as the extent of the crisis at Northern Rock was becoming apparent, analysts were sticking with their buy recommendations

    On the morning of Northern Rock's sudden surprise announcement of the extent of its problems and its recourse to the Bank of England for urgent assistance, John-Paul Crutchley, the banking analyst at Merrill Lynch who has bought Northern Rock four times since January, was still sticking with his 913p price target – although he admitted that "the risks to our price objective are a more prolonged credit market closure than expected".

  2. Hit the little guys with a bag. Beautiful. :D

    Thanks for the story.
  3. zer0


    Yeah i saw also the cocky STRONG BUY recommandation by Merril Lynch (target 913p.) just before the stock took -50%