The markets responded positively today to Lehman’s announcement of its second quarter results, its provision of a financial supplement that gave more detail on its balance sheet exposures and how they had changed over time, and its investor conference call, The stock was up over 5% of the day, although its closing price of $27.20 […]
Read more...The Wall Street Journal reports that criminal charges against the managers of the failed Bear Stearns hedge funds, Ralph Cioffi and Matthew Tannin, are imminent. The Journal also indicates there are no charges pending against Bear Stearns or any other Bear executives. Pray tell, why not? The funds were clearly under the supervision of Bear […]
Read more...Today’s New York Times provides an interesting bit of context for investment banks woes: losses from July 2007 to present roughly equal the profits earned from the beginning of 2004 through that date. The story merely alludes to the question of whether the rich bonuses of the boom years were warranted, but broaches another topic […]
Read more...Institutional Risk Analytics has an informative, engaging interview with Martin Mayer, who is a professional polymath (he is the author of 34 books, former banking columnist, art critic, film critic, and currently a guest scholar at Brookings). I very much recommend reading the entire piece and provide some tidbits below. From Institutional Risk Analytics: Mayer: […]
Read more...While this Bloomberg story notes that the bath Goldman took on a leveraged loan to Dutch TV producer Endermol was considerably below recent LBO loan haircuts (27.5% versus the typical
Read more...Kudos to the New York Times’ Floyd Norris for this little bombshell: On March 18, when the company reported a profit for the first quarter, even as other firms were reporting losses — and just after Bear Stearns collapsed — Lehman had to confront rumors that had sent its share price tumbling. It did so […]
Read more...Lehman removed its high profile, recently appointed CFP Erin Callan (who will return to investment banking and its president Joseph Gregory (who will leave the firm) when aggressive PR campaign failed to shore up confidence in the embattled bank. (Correction: the initial information at the Financial Times was wrong, Gregory remains at Lehman) The markets […]
Read more...Normally, underwriting a public stock offering is a highly profitable, low risk business. In the US, managers and underwriters collect a handsome fee (7% gross spread on IPO, lower on secondary offerings) but assume virtually no risk, because the deals are (usually) pre-sold via investor commitments (circles) before the deal is priced and the underwriters […]
Read more...Lehman took a beating today, with its stock down 13.6% versus its previous close, and 15.2% lower than its offering price (and those trades haven’t even settled yet). The volume was three times the normal level. So much for implications of having an oversubscribed deal. This Google stock chart sadly isn’t as upscale looking as […]
Read more...Lehman sold $4 billion of common stock and $2 billion of convertible preferred this morning. The key terms of the convert: The Preferred Stock has a liquidation preference of $1,000 per share, and will pay quarterly cash dividends on a non-cumulative basis, when, as and if declared by the Board of Directors, at a rate […]
Read more...I’m updating this contrary to my usual style, with the latest breaking news update at the top, and you can read the earlier byplay below for entertainment, background, and detail on the fundraising. I suspect there are going to be more Lehman updates today, and I think it’s a bit easier for readers to consolidate […]
Read more...Without a doubt, the Federal Reserve now faces the most difficult financial and economic climate in our collective memory. And it is increasingly apparent that its options are constrained. Although it is premature to arrive at definitive judgments, it’s nevertheless worth asking whether some of these limitations were unwittingly self-created. Friday’s market rout, triggered by […]
Read more...I suppose I should be pleased, since readers wrote to inform me that Charles Gasparino of CNBC made mention of us on Friday (this clip, starting at 1:30) for our coverage of Lehman. However, I would have been happier if the statements made were correct. It’s remarkable that a seasoned journalist would assert that a […]
Read more...Perhaps I am jaded, but consider: 1. Lehman leaks an internal memo to CNBC’s Charles Gasparino which says that the firm’s net leverage and liquidity are considerable better than that of Goldman and Morgan Stanley 2. Lehman is nevertheless looking to raise a lot of equity, most likely common at a price that would be […]
Read more...An institutional investor passed along these initial estimates of the damage that the Street will take from the downgrade of MBIA and Ambac, Bear in mind that these presumably do not become operative until Moody’s joins S&P in deeming both concerns’ insurance subs to be AA. These loss forecasts are only those to banks and […]
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