JP Morgan Buys Bear Stearns for $2 a share

[ziggy29]

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.

It's not the last hour of the trading day yet. Check back after 3 PM EDT. That's when most of the recent carnage has occurred and when most rallies have faded.

 

[al_bundy]

and JP Morgan which is part of the Dow is up 10%

 

[W2R]

It's not the last hour of the trading day yet. Check back after 3 PM EDT. That's when most of the recent carnage has occurred and when most rallies have faded.

You're right. I will hold onto my hat and keep checking. Down 131 by now (noon Eastern time). So far not bad but as you say, who knows until the last hour of the day.

 

[Texas Proud]

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.

The talking heads said something like $6 billion of liabilities such as shareholder lawsuits and such...

So the discount is not as much as it looks...

BUT, it might have been cheaper to let it go into bankruptcy and then buy up the pieces that you want... without any liability coming with them.... the market would have tanked, but who cares.....

 

[W2R]

OK, it's 3 PM Eastern time and the Dow is up 31 points or so.

Let the carnage begin?

 

[Patrick]

The talking heads said something like $6 billion of liabilities such as shareholder lawsuits and such...

The first class-action lawsuit has just been filed by the shareholders.

 

[al_bundy]

OK, it's 3 PM Eastern time and the Dow is up 31 points or so.

Let the carnage begin?

closed out my shorts just now as well

one thing i noticed in the last year or so is that days where the futures are down some insane amount the market usually closes up or at the upper range of the day's range

and charts look like we are making a bottom, at least for now

 

[Rustic23]

Everything I am reading is predicting a very difficult week ahead (and beyond).

I use to think the press had an agenda, however, in this case I think it is more 'If it bleeds it leads'.

Or are they so stupid to be pursuing a political agenda. i.e. bad for the economy, good for Democrats. I would hope not, but in the past bull market they never publicized the good. When the unemployment rate was under 4.6%, you never heard about it. If you did it always had a negative attached, like 'quality of jobs are not their'.

 

[Bigritchie]

170 a share a year ago, and sold at 2 bucks a share....

 

[ladelfina]

mordant:

 

[Spanky]

170 a share a year ago, and sold at 2 bucks a share....

The final price will most likely be higher since shareholders may reject the offer and ask for a higher price or another bidder may come.

 

[Bimmerbill]

I guess I don't understand how it happened again. A big company caught up in a bubble going belly-up. Did they over invest in CDOs? You'd think after the .com bubble companies would be less apt to get sucked into a bubble.

 

[Texas Proud]

The final price will most likely be higher since shareholders may reject the offer and ask for a higher price or another bidder may come.

Probably not... only two showed up this weekend with government backing...

Do you think the government is going to make that offer to others? Probably not since they already have a 'deal' in place....

IMO the only other option is bankruptcy or HOPE that the finances change enough that they do not have to file...

But... when the government backing and JPM goes away... bye bye equity...

 

[quietman]

I guess I don't understand how it happened again. A big company caught up in a bubble going belly-up. Did they over invest in CDOs? You'd think after the .com bubble companies would be less apt to get sucked into a bubble.

All the CEO incentives are set to reward risk takers - no matter how foolish - as long as the gamble pays off. If the gamble fails spectacularly enough there's a chance of bailout. If the gamble fails moderately there's a golden handcuff to ease the CEO out and a new one in. If the gamble just fizzles there's a chance to keep your position and try again. If the CEO is willing to take a spin, he might become fabulously wealthy.

Here we are in the middle of mopping up the mess remaining after Bear implodes and the "hero" will be JP Morgan who rides in with either a steal or an implosion of their own when they dig into the Bear books and find out just how bad the mortgage derivitives positions are. In fact, before the dust settles here's the next big CEO taking a gamble of his own. Heads I win. Tails you owe me millions in severance. There's no way for CEOs to lose.

 

[Spanky]

Heads I win. Tails you owe me millions in severance. There's no way for CEOs to lose.

That's kind of game that I like to play.

 

[Independent]

Here we are in the middle of mopping up the mess remaining after Bear implodes and the "hero" will be JP Morgan who rides in with either a steal or an implosion of their own when they dig into the Bear books and find out just how bad the mortgage derivitives positions are. In fact, before the dust settles here's the next big CEO taking a gamble of his own. Heads I win. Tails you owe me millions in severance. There's no way for CEOs to lose.

If I read the news stories correctly, the Fed has somehow guaranteed the value of the BS assets.
I think that means that if JPM finds out the derivatives are worse than they thought, the taxpayers make up the difference.
Of course, they could turn out to be better than JPM thought. In which case, I assume since there is nothing to suggest otherwise, JPM pockets the increase.

 

[Spanky]

The new $2 dollar bill:

 

[Helena]

You mean that $200K I sunk in Bear Stearns Friday wasn't a smart move.

How would you like to be in this UK billionaire's shoes ?
He bought 10% of Bear in September; and has now lost
hundreds of millions... he's trying to block JPM's takeover.



Billionaire Lewis moves to block JP Morgan

18/03/2008

British billionaire Joe Lewis is working to block JP Morgan Chase's $236m discounted takeover of Bear Stearns in order to negate the $1bn (£500m) loss he now faces.


Billionaire Lewis moves to block JP Morgan - Telegraph

 

[chinaco]

How would you like to be in this UK billionaire's shoes ?

I can understand how he feels. But he took a risk and it didn't work out.

He may be within his legal right to try to get more money out of the deal.

 

[FinanceDude]

I can understand how he feels. But he took a risk and it didn't work out.

He may be within his legal right to try to get more money out of the deal.

All he needs to do to offset it is find $999,997,000 in gains............

 

[Notmuchlonger]

Well if you bought Bear at 2 a share you would be doing really well today

 

[dmpi]

We need to get a bidding war started and get the stock back up to $30.

 

[Hamlet]

I was watching Kudlow last night, and they were talking about the Fed changing the rules on Monday so that investment banks can borrow from the Fed just like commercial banks.

Can't BS go to that window now and borrow enough money to get them through any liquidity issues?

Or is their balance sheet so bad that they don't have enough "AAA" paper to use as collateral?

Note-- I don't share Kudlow's rage that this rule was just changed. Seems strange for an "free market capitialism" guy to be angry about the government not giving loans to private companies.

 

[Patrick]

We need to get a bidding war started and get the stock back up to $30.

Yeah, then we can all sell @ $30! But who will we sell to?

 

[Retire Soon]

JP Morgan Chase may raise their bid for Bear Stearns to $10 a share.

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