JP Morgan Buys Bear Stearns for $2 a share

[retire@40]

They said on Bloomberg that the Fed dropped the rate 25 points 5 minutes after the announcement of the JP Morgan purchase of BSC.

Inflation Inshmlation.

Why worry about about returning to the Carter years when all hell is breaking loose now?

We'll worry about inflation next year when we need to move interest rates back up to 15% to fight that.

Head down and keep moving.

 

[barbarus]

I think we all need to gather in a circle, hold hands with our eyes closed, and sing "Koom-bye-yah" along with "Stay the Course" chanting.

(Just KIDDING...)

I'm glad. I didn't want to add nausea to my other problems.

 

[retire@40]

Since they paid $2 a share and the building is worth $8 a share, why wouldn't JP Morgan liquidate everything and pocket $6 a share overnight?

And if this happens, why couldn't Bear Stearns have done the same thing?

 

[Spanky]

GLD (Gold ETF) is still worth buying despite its lofty price.

 

[Spanky]

Since they paid $2 a share and the building is worth $8 a share, why wouldn't JP Morgan liquidate everything and pocket $6 a share overnight?

And if this happens, why couldn't Bear Stearns have done the same thing?

They want to save the bank and to prevent a financial market meltdown or crisis.

 

[chinaco]

Little surprise there.

Now lets put Bear Stearns leadership in the penitentiary for fraud and make them disgorge and the sheet will be balanced.

 

[Patrick]

Time to buy some BSC near $2?

 

[Texas Proud]

Since they paid $2 a share and the building is worth $8 a share, why wouldn't JP Morgan liquidate everything and pocket $6 a share overnight?

And if this happens, why couldn't Bear Stearns have done the same thing?

True, the one building in Manhattan is worth more than what is being paid...

BUT, someone with some capital had to 'guarantee' BS obligations... nobody else stepped up to the plate, so you bid only $2...

If HSBC or RBS had shown up, I am sure the price would have been higher...

Sometimes it is luck that gets you the good deal....


What is interesting is that JPM is saying the book value of BS (at $80 ish IIRC) is CORRECT... given time to unwind and all.... so JPM just made a few billion if they are even close to correct... glad I own them and not BS...

 

[maddythebeagle]

hey at least you didnt lose over a billion....

Bloomberg.com: Worldwide

 

[al_bundy]

MarketWatch.com: Stock Market Quotes - Business News - Financial News

they are calling this two buck chuck

 

[ziggy29]

So why is BSC trading for $3.60 if JPM's only buying it for $2?

 

[Spanky]

So why is BSC trading for $3.60 if JPM's only buying it for $2?

it's not a done deal.

 

[Retire Soon]

True, the one building in Manhattan is worth more than what is being paid...

The Bear Stearns new headquarters is worth over $1 billion. JP Morgan purchased Bear for $236 Million, so they probably acquired the building at a discount of approximately $764 million.

Free Preview - WSJ.com

 

[ziggy29]

The Bear Stearns new headquarters is worth over $1 billion. JP Morgan purchased Bear for $236 Million, so they probably acquired the building at a discount of approximately $764 million.

Free Preview - WSJ.com

Either that or the rest of the business operations have a negative net worth.

 

[saluki9]

The Bear Stearns new headquarters is worth over $1 billion. JP Morgan purchased Bear for $236 Million, so they probably acquired the building at a discount of approximately $764 million.

Free Preview - WSJ.com

What, you think they paid cash?

That $1B building probably has $995M of debt on it. Hell, it's probably owned by a REIT in a sale leaseback.

 

[Retire Soon]

What, you think they paid cash?

That $1B building probably has $995M of debt on it. Hell, it's probably owned by a REIT in a sale leaseback.

You're probably right on that one.

 

[UncleHoney]

Maybe Countrywide cut their good buddies at BSC a special deal on a subprime.

 

[FinanceDude]

Jamie Dimon is no dummy. Bottom line, he got the Fed to back him so has NO RISK to take over Bear's liabilites. Plus, he knows Bear can't raise any money in the markets or borrow any more money, so he gives them an artificially bid as a way out.

Another bank may come in to outbid JPM, but Jamie is testing the waters on that, and I am sure he is prepared to move the bid to $8-$10 a share if necessary, because all he really WANTS is the clients of Bear, and that to him is worth the money........

 

[W2R]

Everything I am reading is predicting a very difficult week ahead (and beyond). Even sources that I would expect to be fairly conservative are saying alarming things, and sounding like Cramer. They say that other banks are sure to follow, and the interest rate may be cut 1-2% by Tuesday but that may not be enough to help, and that the dollar is tanking.

So, I am holding on to my hat and because this part of the roller coaster ride might be long and bumpy (apparently).

Sheesh. The market has been open for over an hour, and the Dow is only down 19 points!!

I'm beginning to wonder why it isn't down more. Maybe this won't be so bad as columnists and other media reporters expected.

Edited to add... OK, OK, 51 points a minute or two later. Maybe it's a little volatile, but still, I expected it to be down 200-300 points at open.

Just keep on buying, everyone...

 

[Patrick]

The Bear Stearns new headquarters is worth over $1 billion. JP Morgan purchased Bear for $236 Million, so they probably acquired the building at a discount of approximately $764 million.

Free Preview - WSJ.com

They just said on CNBC that the breakup value of BSC is $7.7B. Since JPM would buy it for $240M, that would be a 32:1 ratio. Sounds like a pretty good investment.

 

[unclemick]

Yep my JP bounced up 2.89/shr. Hope they don't get carried away - I may want to buy some more in coming months - with mad money of course.

heh heh heh -

 

[W2R]

Yep my JP bounced up 2.89/shr. Hope they don't get carried away - I may want to buy some more in coming months - with mad money of course.

heh heh heh -

So true! A reasonable low is nice for buying, as long as we don't go over a cliff or something and end up taking decades to recover.

 

[al_bundy]

Yep my JP bounced up 2.89/shr. Hope they don't get carried away - I may want to buy some more in coming months - with mad money of course.

heh heh heh -

looking at it as well, but need to read up first about the risk they are taking on. otherwise it looks like they paid peanuts for some nice businesses

 

[HFWR]

You think that loss makes this a bottom? God, that seems hopeful to me. How can all these companies lose this much money?

But it's a paper loss...

\

Is that a bottom call?

I'm more interested in a booty call...

 

[ziggy29]

But it's a paper loss...

That's the problem with leverage and buying on margin. "Paper losses" are just that for people (and businesses) who can wait it out, are not leveraged and have a long timeframe. For those who are heavily leveraged, "paper losses" can lead to a death spiral of margin calls, forced sales and further declines in their asset values.