Bear Stearns Auction?

[GRG55]

Re: Bear Stearns Auction?

It is true that institutions own the majority of the shares and I understand what you are saying but then again BSC is trading almost 300% above $2. It is true that if we take all the shares owned by the insiders and the five largest institutional holders we already have more than 50%. But how likely is it that those largest institutional holders, and one of them is UK based, agreed so quickly in a timeframe of one or two days?

If it were a done deal there would be arbitrage opportunity that hedge funds would take advantage of, that is clearly not happening.

If you have a better explanation I would like to hear it.
To me it is a mystery. I have never seen anything like this, a stock trading 300% over its value, it is unheard of.

Let's remember the Fed has agreed to take on BSC's Level 3 garbage to facilitate the JPM deal. I doubt they will aid market uncertainty by extending that sweetheart option to any other bidder. As I understand it JPM also has an irrevocable option on BSC's headquarter building in Manhattan.

I seem to recall that UK taxpayer-bloodsucking Northern Rock shares also traded above it's take out price for quite some time before the wooden stake was finally driven home. Why someone thinks BSC stock is worth $8.00 is beyond me. Any financial company trying to interfere with this deal is juggling dynamite - but then, given their recent track record, perhaps we should not underestimate the hubris of Wall Street's finest minds.



After all they helped bring us this (also beyond me during the set-up to disaster):

Pets.com latest high-profile dot-com disaster

The online pet store known for its popular sock puppet spokesdog is shutting down its retail operations and laying off 255 employees.

Published: November 7, 2000, 3:00 PM PST

...Trading in Pets.com stock was temporarily halted Tuesday. When trading resumed, the price promptly plunged to 22 cents from 66 cents, a one-day decline of 67 percent. Volume topped 4 million shares.

After trading as high as $14 this year, the rock-bottom stock price values the entire company at about $6.4 million. The month before it went public, the company spent almost half that amount on 30 seconds of advertising during the Super Bowl...

...Pets.com is only the latest Internet company to join the dot-com death watch. Monday, Furniture.com said it had shut down, and earlier this month, male lifestyle site TheMan.com closed down its site. In recent weeks, Beautyjungle.com, Eve.com and BigWords.com have either closed their doors or laid off staff...

[c1ue]

Re: Bear Stearns Auction?

Yep, the $2 price is just so bankruptcy courts don't get involved.

I think any shareholder who wants to hold out gets a view of just how insolvent BSC really is, then lunges for the $2.

[jmdpet]

Re: Bear Stearns Auction?

Here's one explanation:

http://bigpicture.typepad.com/commen...-bear-ral.html

There is a simpler explanation, one that might surprise you: BOND HOLDERS are buying up Bears loose stock. As much as they can get.

Why?

THEY WANT TO MAKE SURE THE DEAL GETS DONE!

Consider: there is ~$75 billion in outstanding bonds (see Bloomberg screen below), and another $75 billion in other miscellaneous paper (no source). Prior to the BSC/JPM deal's announcement, the BSC Bonds were trading for 80 cents on the dollar.

Imagine your fund owned a one billion dollars worth of Bear bonds (mark to market = $800 million). Isn't it worth buying 10 million shares or so at $3 - 4 or so dollars a share? You will get $2 per share in JPM stock, so buying it a few bucks over the takeover price isn't all that risky. Remember, insiders own 30%, and Joe Lewis also owns about 10%.

So as mad as the accumulation appears, its actually quite rational -- IF YOU ARE A MAJOR BOND HOLDER, and are doing this to capture voting stock. (All the other idiots buying BSC are pretty much fucked).

[GRG55]

Re: Bear Stearns Auction?

Here's one explanation:

http://bigpicture.typepad.com/commen...-bear-ral.html

"...There is a simpler explanation, one that might surprise you: BOND HOLDERS are buying up Bears loose stock. As much as they can get..."

At $8.00 per share???

[blazespinnaker]

Re: Bear Stearns Auction?

Read the blog. It's an interesting theory.

Unfortunately, the weakness is that the more the 'bond holders' buy the stock, the higher it goes, the less likely that the bag holders (err, shareholders) are going to approve the deal.

[GRG55]

Re: Bear Stearns Auction?

Read the blog. It's an interesting theory.

Unfortunately, the weakness is that the more the 'bond holders' buy the stock, the higher it goes, the less likely that the bag holders (err, shareholders) are going to approve the deal.

I did read it. Someone posted it earlier on another thread.

Here comes the circus...

Billionaire Lewis moves to block JP Morgan

By James Quinn, Wall Street Correspondent

Last Updated: 12:09am GMT 19/03/2008






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.

Mr Lewis, whose Tavistock Group is Bear's second largest investor with a 9.4pc stake, is understood to be deeply unhappy with JP Morgan's $2-a-share offer...

...Were Mr Lewis to be successful in blocking the Bear/JP Morgan transaction, it would provide the Federal Reserve with a considerable headache, leaving it with tens of billions of potential liabilities...
http://www.telegraph.co.uk/money/mai...cnlewis118.xml

[bill]

Re: Bear Stearns Auction?

Here comes the circus...

My comment regarding what Dr, said would happen.
http://www.itulip.com/forums/showthr...14556#poststop

Sharks are circling biting at each other to get into position to sink their teeth into assets to be liquidated

[blazespinnaker]

Re: Bear Stearns Auction?

Absolutely zero chance. Dimon's got it. The Fed and Treasury don't want any uncertainty about what the outcome for Bear is going to be. Markets don't like uncertainty.

http://www.itulip.com/forums/forumdisplay.php?f=5

[jimmygu3]

Re: Bear Stearns Auction?

Zero chance. Unless Ben and Hank both resign. Right now.

You don't think they have enough problems on their plate? You think they give a shzt about the Bear shareholders? And exactly which company is going to come in and start a bun fight with JPM over the carcass? Citi? BoA? WaMu? Wells? Merrill? Morgan? Who? There isn't a financial company out there that doesn't know that they may need good friends in the Fed and Treasury some day soon. There are not going to spoil this party.

This is a done deal, and all the crap about Bear employees having to vote on the takeover and maybe not approving it, is complete nonsense.

J.P. Morgan blinks, sweetens bid for Bear

NEW YORK (MarketWatch) -- Shares of Bear Stearns Cos. doubled Monday after J.P. Morgan Chase & Co. said it would raise its buyout price for the firm to $10 a share from the previously announced $2 a share.... (full article)

Never say never, GRG55. Maybe it's not another bidder, but the price was driven higher nonetheless. Anyone who bought a week ago is up over 200% now.

I see this whole thing as the insiders screwing the rest of the shareholders. I think they had every intention of raising the bid above $2, but throwing that number out there with the Fed involved was a great way to flush out all the shares from dummies like me into the hands of those in the know. People were selling last week thinking "I can't believe somebody's giving me $4 for this stock that's worth $2!", while the buyers were well aware that the actual buyout price would be much higher. The current price of $13.20 tells me the insiders might have even more tricks up their sleeve.

Sales and marketing deals with creating percieved value in the minds of buyers. The $2 announcement was a ploy to create an artificially low percieved value in the minds of sellers.

[blazespinnaker]

Re: Bear Stearns Auction?

TAKE BS private, take them all private, that will be the next move, you watch! No disclosure problems with a PRIVATE Company. Just crater the price, then by it cheap. (It's all cheap anyway when you can print money, who cares what ******* price you pay, if you don't have to pay for the money). I hear counterfitting can be quite lucrative, BTW.

Actually, going back to a partnership model is a good idea, instead of this OPM stuff.

I think OPM leads to overly risky business plans.

[Tulpen]

Re: Bear Stearns Auction?

It is a total mess and incompetence is written allover it. But the praising in the press of Bernanke will continue unabated......

[blazespinnaker]

Re: Bear Stearns Auction?

J.P. Morgan blinks, sweetens bid for Bear

NEW YORK (MarketWatch) -- Shares of Bear Stearns Cos. doubled Monday after J.P. Morgan Chase & Co. said it would raise its buyout price for the firm to $10 a share from the previously announced $2 a share.... (full article)

Never say never, GRG55. Maybe it's not another bidder, but the price was driven higher nonetheless. Anyone who bought a week ago is up over 200% now.

I see this whole thing as the insiders screwing the rest of the shareholders. I think they had every intention of raising the bid above $2, but throwing that number out there with the Fed involved was a great way to flush out all the shares from dummies like me into the hands of those in the know. People were selling last week thinking "I can't believe somebody's giving me $4 for this stock that's worth $2!", while the buyers were well aware that the actual buyout price would be much higher. The current price of $13.20 tells me the insiders might have even more tricks up their sleeve.

Sales and marketing deals with creating percieved value in the minds of buyers. The $2 announcement was a ploy to create an artificially low percieved value in the minds of sellers.

I agree, this was a colossal SNAFU of immense scale.

I think we'll be hearing about this for a very long time to come.

[Tulpen]

Re: Bear Stearns Auction?

I agree, this was a colossal SNAFU of immense scale.

I think we'll be hearing about this for a very long time to come.

I think I know what FU stands for, but what is SNA?

[Jim Nickerson]

Re: Bear Stearns Auction?

I think I know what FU stands for, but what is SNA?

Situation normal all f'd up. Old military initialism I believe.

[GRG55]

Re: Bear Stearns Auction?

J.P. Morgan blinks, sweetens bid for Bear

NEW YORK (MarketWatch) -- Shares of Bear Stearns Cos. doubled Monday after J.P. Morgan Chase & Co. said it would raise its buyout price for the firm to $10 a share from the previously announced $2 a share.... (full article)

Never say never, GRG55. Maybe it's not another bidder, but the price was driven higher nonetheless. Anyone who bought a week ago is up over 200% now.

I see this whole thing as the insiders screwing the rest of the shareholders. I think they had every intention of raising the bid above $2, but throwing that number out there with the Fed involved was a great way to flush out all the shares from dummies like me into the hands of those in the know. People were selling last week thinking "I can't believe somebody's giving me $4 for this stock that's worth $2!", while the buyers were well aware that the actual buyout price would be much higher. The current price of $13.20 tells me the insiders might have even more tricks up their sleeve.

Sales and marketing deals with creating percieved value in the minds of buyers. The $2 announcement was a ploy to create an artificially low percieved value in the minds of sellers.

This thread started with:

I wonder if this whole 2$ rigamorole is just an ploy to put the equity on the auction block.

I do not see an auction.

Absolutely zero chance. Dimon's got it. The Fed and Treasury don't want any uncertainty about what the outcome for Bear is going to be. Markets don't like uncertainty.

Near as I can tell Dimon's still got it. And markets still don't like uncertainty. The people making money off this thing weren't doing anything uncertain...because blazespinnaker was right - someone, including the Fed, knew something the rest of us did not.

Zero chance. Unless Ben and Hank both resign. Right now...

...This is a done deal, and all the crap about Bear employees having to vote on the takeover and maybe not approving it, is complete nonsense.

It's still a done deal - only it's going to get done at a higher price. And a very small number of people with inside information are going to make a lot of money - with the US taxpayer sponsoring the corruption. Do any of you think the shareholder vote on this thing will be anything other than a stage managed formality.

ax and I had this exchange:

Or at least last Thursday. Somebody bought 55,000 March 30s....seems like they knew something.

...and don't expect the SEC to do a damn thing about it either.

Do any of you think the SEC is going to do anything???

I stand by what I said: There will be no auction, Dimon's got it, the shareholder's vote will be a sham, and the SEC won't do a damn thing about it.

Wall Street takes care of its own. And I can think of few better illustrations than this.