they believe LEH's best course of action would be a "going-private" transaction since it is the public equity mkts that are the threat to the co's survival. "The public equity mkts are a threat to its survival......." Is that what it is supposed to be? You can't survive publically, so you need to go private? 13:34 LEH Lehman Brothers: Follow up on Fox Pitt comments (13.90 -0.53) -Update- Fox Pitt continues to believe that the decline in LEH's stock has little to do with the co's liquidity and balance sheet, but is more based on investors' pricing in the probability of a Bear Stearns-like run-on-the-bank. Meanwhile, they believe there is increasing danger that counterparties, creditors, and customers will be spooked by the stock's action, thus completing the vicious cycle of a self-fulfilling prophecy. As with BSC, they firmly believe that LEH has been targeted by the fear-trade, and there are media reports that executives are working with the SEC to track down rumor-mongering. They still believe that an emergency prohibition of short-selling in brokerage shares is imperative. In the absence of such a measure, they believe LEH's best course of action would be a "going-private" transaction, since it is the public equity mkts that are the threat to the co's survival.
What is so surprising about such a comment when its TRUE? We are talking about the BANKING sector here, and CONFIDENCE has a lot to do with your success as an ongoing, viable entity.
When there are comments such as this actually setting forth the proposition that the equity market is a threat to a 'well capitalized' and fiscally sound company, I would agree. The problem here is that I'm not so sure, and apparently a lot of people share my doubts, that Lehman is a well capitalized and fiscally sound company. A lot of the problems in the financial markets are occurring because of the creation of CDOs. What Warren Buffet said about them is truly prophetic. They are financial weapons of mass destruction. Did you see the Bloomberg article on the 'mysterious 1.1 trillion' that Citigroup apparently can't prove it has? We are seeing a meltdown because they manipulated the valuation and appraisal tools so fraudulently. No one knows what anything that doesn't have an immediate, willing and able buyer is worth.
I've been saying that same thing for months. This govt is clueless. Turn the market back over to the thieves that used to run the NYSE floor, they'll straighten it out in a week. And to anyone that doesn't think its true. A hearty F#$% Y@# You have to remember , that most people are imbeciles. They respond like imbeciles, and must be controlled like imbeciles. Plain and simple.
The comment and logic made sense to me when they said it, however, it strikes me that if Leh approached PE about taking it private, the stock would still decline, and do so rapidly, as any shops may initially balk, (even if they, and especially if they have an interest in buying it) and bet against it, in the knowledge they (Leh) may be even more compromised, and, to reduce their risk in this market environment, (as opposed to a year and a half ago! when the sky was the limit), and effectively do a take-under. The list of early equity injections that have gone bad is as long as your arm now, may as well 'negotiate' as best you can, even if it requires driving down your suitor, to bring them to the alter, as it were.
I'm sick of the SEC and Lehman's and others' bitching and moaning about 'woe is me.' If Lehman thinks they are being unfairly punished, or significantly undervalued, they should put themselves up for sale at a dutch auction. I wish them good luck.
Perhaps the SEC should adopt a new rule. Once the number of shares sold short exceeds 200% of the float no more short selling for the remainder of the day.
Operating a company in the public area presents one with all kinds of issues that would never occur in the private market. For starters as a public company the only thing anyone gives a damn about is last quarters and this quarters earnings. Growth, Growth, Growth at all costs. If you operate as a private company you can focus on fixxing some problems that may have a huge impact on present earnings, but are going to pay off big time later on. That is why groups like Blackstone etc take over troubled companies and bring them private, they do not keep them as public companies because it would be very difficult to turn them around, if not impossible. Nothing new with that.