Archive for March 16th, 2008
Filed under: JPMorgan Chase (JPM), Bear Stearns Cos (BSC)
BusinessWire reports that JPMorgan Chase & Co. (NYSE: JPM) has closed a deal to acquire The Bear Stearns Companies (NYSE: BSC) for $2 a share — 99% below its all-time high of $167 a share in February. On the face of it, this sounds like a low price — $236 million. But the Fed is kicking in $30 billion to fund Bear’s “less liquid assets.” Taking into account the $1 billion value of its headquarters, this deal values Bear at negative $764 million.
And then there’s the question of risk. According to JPMorgan, “Bear Stearns’ clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns’ counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.” I guess this means that JPMorgan’s biggest “price” is the counterparty risk risk it’s assuming.
I guess that explains why JPMorgan is paying $1.76 billion less than the $2 billion figure being floated earlier this evening. Nevertheless, I think the markets will like the fact that JPMorgan and the Fed have decided not to let Bear’s blood drift around in those shark invested waters for more than a few days.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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Filed under: Earnings reports, Bear Stearns Cos (BSC)
 Goldman Sachs (NYSE: GS), Lehman Bros. (NYSE: LEH), Morgan Stanley (NYSE: MS), and Bear Stearns (NYSE: BSC) are scheduled to report quarterly results this week. Unless you spent your Spring Break last week on Mars, you probably heard about the blow-up at Bear Stearns. But just in case, here’s a quick look back at the most recent BloggingStocks coverage of Bear Stearns to bring you up to speed before tomorrow’s Bear Stearns first-quarter report and whatever the coming week may bring:
Continue reading Bear Stearns recap
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Filed under: Earnings reports, Bear Stearns Cos (BSC)
Goldman Sachs (NYSE: GS), Lehman Bros. (NYSE: LEH), Morgan Stanley (NYSE: MS), and Bear Stearns (NYSE: BSC) are scheduled to report quarterly results this week. Unless you spent your Spring Break last week on Mars, you probably heard about the blow-up at Bear Stearns. But just in case, here’s a quick look back at the most recent BloggingStocks coverage of Bear Stearns to bring you up to speed before tomorrow’s Bear Stearns first-quarter report and whatever the coming week may bring:
Continue reading Bear Stearns recap
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Filed under: JPMorgan Chase (JPM), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)
The New York Times reports that JPMorgan Chase & Co. (NYSE: JPM) and The Bear Stearns Companies (NYSE: BSC) are in talks this afternoon which could result in a $2 billion deal — about $1.0 billion for the Bear headquarters on Madison Avenue and another $1 billion for whatever net worth is left after paying off obligations. This would leave Bear shareholders down $1.5 billion from its current market capitalization.
This would be a relatively benign outcome for shareholders — depending on whether the deal was a stock swap or involved cash. The alternative is for Bear to file for bankruptcy which would be a total wipe out for shareholders and would freeze the assets of those Bear customers which have not yet withdrawn their money. The deal is being rushed for completion by 8 p.m. EDT — so it can be announced before the Asian markets open for Monday morning trading.
For those who are upset about the Fed bailing out Bear, this deal would be a major heaping plateful of crow. And it could restore some level of confidence in the credit markets. Alternatively, it might just be a temporary bright spot in a very gloomy stretch of financial weather. It’s unclear whether Lehman Brothers Holdings Inc. (NYSE: LEH) could be next and if so, whether there’s any financial institution out there who can take that over.
Update: The Wall Street Journal reports that JPMorgan wants Bear’s prime brokerage business which deals with hedge funds and that Bear’s clearing and investment banking units could also prove valuable. However, JPMorgan may back away unless it can limit its exposure to Bear’s risks.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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Filed under: JPMorgan Chase (JPM), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)
The New York Times reports that JPMorgan Chase & Co. (NYSE: JPM) and The Bear Stearns Companies (NYSE: BSC) are in talks this afternoon which could result in a $2 billion deal — about $1.0 billion for the Bear headquarters on Madison Avenue and another $1 billion for whatever net worth is left after paying off obligations. This would leave Bear shareholders down $1.5 billion from its current market capitalization.
This would be a relatively benign outcome for shareholders — depending on whether the deal was a stock swap or involved cash. The alternative is for Bear to file for bankruptcy which would be a total wipe out for shareholders and would freeze the assets of those Bear customers which have not yet withdrawn their money. The deal is being rushed for completion by 8 p.m. EDT — so it can be announced before the Asian markets open for Monday morning trading.
For those who are upset about the Fed bailing out Bear, this deal would be a major heaping plateful of crow. And it could restore some level of confidence in the credit markets. Alternatively, it might just be a temporary bright spot in a very gloomy stretch of financial weather. It’s unclear whether Lehman Brothers Holdings Inc. (NYSE: LEH) could be next and if so, whether there’s any financial institution out there who can take that over.
Update: The Wall Street Journal reports that JPMorgan wants Bear’s prime brokerage business which deals with hedge funds and that Bear’s clearing and investment banking units could also prove valuable. However, JPMorgan may back away unless it can limit its exposure to Bear’s risks.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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Filed under: Competitive strategy, Sears Holdings (SHLD), Nordstrom, Inc (JWN)
While the sagging dollar and swooning stock market has made me more likely to shop at Sears (NASDAQ: SHLD) than at Nordstrom (NYSE: JWN), I am considering the 10 Things to Add a Glamorous, Global Twist to my looks.
Instead of stories about basketball players dropping $10k for a pair of shoes, Bloomberg is running a story on some short selling going on at Nordstrom.
The upscale retailer has embarked on an aggressive store expansion. The company will add 1.11 million square feet in 2008, more than twice that which was added in 2007. With that expansion in square footage has come an commensurate increase in short sales volume (those sold with the intention of betting on the stock price decreasing in JWN).
Analysts are fearing that while Nordstrom may have it going on in terms of hitting the fashion bulls-eye, such aggressive expansion may negatively affect the company. The same Bloomberg story quotes a Wall Street analyst who said that “slowdown in square-footage growth” would make her more positive on the Nordstrom story.
Much as an astute investor in the stock market would use price pullbacks to add to positions he or she likes, Nordstrom is leveraging cut-backs in store expansions at competitors to land what it feels are prime locations for new stores.
With fears that the U.S. consumer will suffer more than he is presently, investors are nervous that store expansion may leave Nordstrom with a lot to sell and not a whole lot of buying going on.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
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Filed under: Competitive strategy, Sears Holdings (SHLD), Nordstrom, Inc (JWN)
While the sagging dollar and swooning stock market has made me more likely to shop at Sears (NASDAQ: SHLD) than at Nordstrom (NYSE: JWN), I am considering the 10 Things to Add a Glamorous, Global Twist to my looks.
Instead of stories about basketball players dropping $10k for a pair of shoes, Bloomberg is running a story on some short selling going on at Nordstrom.
The upscale retailer has embarked on an aggressive store expansion. The company will add 1.11 million square feet in 2008, more than twice that which was added in 2007. With that expansion in square footage has come an commensurate increase in short sales volume (those sold with the intention of betting on the stock price decreasing in JWN).
Analysts are fearing that while Nordstrom may have it going on in terms of hitting the fashion bulls-eye, such aggressive expansion may negatively affect the company. The same Bloomberg story quotes a Wall Street analyst who said that “slowdown in square-footage growth” would make her more positive on the Nordstrom story.
Much as an astute investor in the stock market would use price pullbacks to add to positions he or she likes, Nordstrom is leveraging cut-backs in store expansions at competitors to land what it feels are prime locations for new stores.
With fears that the U.S. consumer will suffer more than he is presently, investors are nervous that store expansion may leave Nordstrom with a lot to sell and not a whole lot of buying going on.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
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Filed under: Earnings reports, Forecasts, Industry, Goldman Sachs Group (GS), Morgan Stanley (MS)
Goldman Sachs (NYSE: GS) is viewed as the Cadillac of U.S. brokers. And, why not? Even during the last nine months of difficulty in the credit markets, its shares have done better than those of its peers.
That may change this week when Goldman announces earnings. Some schools of thought believe the numbers may be especially ugly. According to the Telegraph, Goldman will announce a massive hit. The broker’s interest in the Industrial & Commercial Bank of China will be taken down due to the falling value of that institution. “Goldman will also take a hit of about $1.6bn in its leveraged loans business, which has seen a marked decline in recent months amid a dearth in demand for trading bank debt. A further $1.1bn will be written down in connection with assets owned by Goldman’s principal investment area.”
Over the past six months, Goldman’s shares are down about 15%. The stock prices of Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) are off more than 40% during the same period.
If Goldman’s earnings show that the premier company in the industry is now being slammed by problems, what does that mean for the weaker firms in the pack.
Goldman’s earnings may be bad for Goldman, but they could be much worse for everyone else in the industry.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Earnings reports, Forecasts, Industry, Goldman Sachs Group (GS), Morgan Stanley (MS)
Goldman Sachs (NYSE: GS) is viewed as the Cadillac of U.S. brokers. And, why not? Even during the last nine months of difficulty in the credit markets, its shares have done better than those of its peers.
That may change this week when Goldman announces earnings. Some schools of thought believe the numbers may be especially ugly. According to the Telegraph, Goldman will announce a massive hit. The broker’s interest in the Industrial & Commercial Bank of China will be taken down due to the falling value of that institution. “Goldman will also take a hit of about $1.6bn in its leveraged loans business, which has seen a marked decline in recent months amid a dearth in demand for trading bank debt. A further $1.1bn will be written down in connection with assets owned by Goldman’s principal investment area.”
Over the past six months, Goldman’s shares are down about 15%. The stock prices of Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) are off more than 40% during the same period.
If Goldman’s earnings show that the premier company in the industry is now being slammed by problems, what does that mean for the weaker firms in the pack.
Goldman’s earnings may be bad for Goldman, but they could be much worse for everyone else in the industry.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Bad news, Management, Rants and raves, Scandals, Halliburton (HAL), Politics, Bear Stearns Cos (BSC), Recession
 My colleague Trey Thoelcke posted a story on Friday regarding Presidents Bush’s concern that the Federal government should not “overreact” to our current economic plight for fear of doing more damage than good.
The president’s concern struck me as odd because most folks having an IQ higher than their age would probably agree that President Bush overreacted in Iraq, and underreacted at home. Thus increasing the probability that we would fall into an economic quagmire that the best and brightest would have difficulty escaping.
I think I am being very generous when I say “increasing the probability” because many on the left and on the right of the political spectrum would be much more frank and say Dubya, you own this own this one pal!
That being said, one might argue that Bush has his rights and his lefts mixed up, as well as his rights and his wrongs. I happen to agree with the president that the federal government could overreact (and has) and do the wrong things — with bipartisan support no doubt. For example I think the $156 billion tax rebate is very bad policy, not helping anyone and hurting everyone — see Serious Money: Stimulate productivity not consumption. I hope anybody reading that particular Serious Money post finds it worthy of starting an e-mail storm because not enough folks understand this point.
Continue reading Bush overeacted in Iraq and undereacted at home
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