Lehman Brothers (LEH)

Lehman LEH

Postby ishak » Fri Aug 22, 2008 2:07 am

Lehman shares fall after report of failed sale
Reuters, 08.21.08

NEW YORK (Reuters) - Lehman Brothers shares fell 4.3 percent on Thursday after a newspaper reported the bank had tried to sell a stake of itself to South Korean or Chinese parties and failed, and a Citigroup analyst reduced his estimates for the sector.

Lehman's share decline came amid a broader drop in financial stocks after oil prices rose and investors' concerns about write-downs mounted.

Citigroup analyst Prashant Bhatia cut his estimate for Lehman's third-quarter results to a loss of $3.25 per share from his prior estimate of a loss of 41 cents per share. He said he expects $2.9 billion of asset-related write-downs for the bank.

Bhatia also cut his estimates for Goldman Sachs Group Inc , Merrill Lynch & Co Inc, and Morgan Stanley , citing expected losses on hard-to-sell assets and lower client trading volumes.

Lehman Brothers, the fourth-largest U.S. investment bank, has taken a roughly $7 billion hit from credit-related write-downs and losses since the start of the global crisis. The bank's shares trade at less than half their book value of about $32.95, signaling that investors see more write-downs coming.

People close to the matter said this week that Lehman is considering selling at least a part of its asset management business.

The Financial Times said late Wednesday that Lehman's talks with China's biggest brokerage, CITIC Securities, and state-owned Korea Development Bank (KDB) on a sale of up to half its shares had failed. The newspaper cited people in New York familiar with the potential buyers.

CITIC told Reuters it had held no formal talks about buying a stake in Lehman, while Lehman and KDB spokespersons declined to comment.

A KDB official, who declined to be identified, said the South Korean bank was scaling back its overseas assets and staff to reduce exposure to volatile foreign markets.

Multiple press reports in recent weeks have touched on parties Lehman may be approaching to raise capital and offload assets.

BHATIA SAYS "BUY"

Citi's Bhatia cut his forecast for Lehman, but rates the bank a "buy."
Bhatia said selling the asset management business or raising equity may be under consideration, but he views them as relatively unlikely actions over the coming months.

"Even under the potentially more stringent rating-agency guidelines related to the amount of preferred securities in the capital mix, we anticipate that Lehman can absorb over $3 billion of after-tax losses without adding more common equity," he said.

Lehman's shares were at $13.14 at midday Thursday after closing Wednesday in New York at $13.73, valuing the bank at around $9 billion. The shares have plunged more than 80 percent since early 2007.

Merrill Lynch shares were down 2.9 percent at $23.70, while Citigroup fell 1.3 percent.

The Wall Street Journal reported the Federal Reserve acted on rumors last month and called Credit Suisse Group to see whether it had pulled a credit line from the bank.

Credit Suisse told Federal Reserve officials that it had no intention of pulling the line of credit, the paper cited people familiar with the matter as saying.

Fed officials contacted Credit Suisse last month, but it is unclear whether the move occurred before or after the Securities and Exchange Commission subpoenaed dozens of hedge funds and financial firms about four Lehman-related rumors, the paper said.

Lehman Brothers and Credit Suisse spokespersons in London declined to comment.
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Lehman LEH

Postby ishak » Fri Aug 22, 2008 3:19 am

Lehman Is Candidate for Hostile Takeover, Ladenburg's Bove Says
By Allen Wan

Aug. 21 (Bloomberg) -- Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm, is a candidate for a hostile takeover, Ladenburg Thalmann & Co. analyst Richard Bove said. He raised his rating on the shares to "buy.''

"Management is unwilling to sell out at a deeply distressed value,'' Bove wrote in a note to clients. "The stage is set for a hostile bid to take over the whole company.''

The Financial Times reported today Lehman failed to sell a 50 percent stake to Korea Development Bank and China's Citic Securities Co. The buyers walked away after deciding Lehman demanded too high a price, the FT said, citing people familiar with the Asian lenders.

Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, slumped 77 percent over the past year as it struggled to pare its debt holdings. The bank has reported writedowns and credit losses of $8.2 billion in the past 12 months, according to data compiled by Bloomberg.

Bove previously had a "neutral'' rating on the shares.

Lehman dropped 2.9 percent to $13.33 at 1:31 p.m. in New York. The stock had earlier fallen as much as 8.7 percent.
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Lehman LEH

Postby ishak » Sat Aug 23, 2008 10:27 am

Lehman Could Be Taken Over Soon: Analyst Bove
CNBC.com, 22 Aug 2008

Embattled Wall Street investment bank Lehman Brothers is running out of time to shore up its financial situation and could be subject to a hostile takeover as early as next week, banking analyst Richard Bove told CNBC.

CEO Richard Fuld "has lost control of the game," Bove said in a live interview by phone. "If he doesn't do something this weekend, as of next week, the game is on."

Bove echoed earlier comments that Lehman is undervalued and that several bidders are likely to emerge soon. He valued Lehman at $20 a share, well above its current price.

Bove's comments came shortly after state-run Korea Development Bank said Lehman was one of its options for acquisitions, reviving expectations that the U.S. investment bank might still bring in a large investor.

"We are studying a number of options and are open to all possibilities, which could include (buying) Lehman," a KDB spokesman said.

Shares in Lehman rose sharply in reaction to the report. The stock has plunged more than 80 percent since early 2007, leaving the bank worth some $9 billion at this week's valuations.

Bove said that even if KDB doesn't make a bid, it could team up with a US firm to acquire Lehman.

"What the Korean Development Bank is clearly saying," Bove said, "is that 'We know we can't take over Lehman. The United States won't let us. But we've got the money, and if you Mister America want to make a bid, come and talk to us and we'll fund it.' "

As reported earlier by CNBC, Lehman has been trying to sell at least part of its investment management division, including the firm's crown jewel, Neuberger & Berman asset management unit, in an attempt to raise capital.

But potential buyers—which include nearly every major private equity firm—are starting to balk at Lehman's initial offer, according to Wall Street executives familiar with the matter.

Their problem is the price. Lehman is pricing the investment management division at around $10 billion, meaning a 70 percent stake would cost $7 billion. But the real cost will be much more than that, because asset management firms are only worth something if employees remain with them following such a transaction.
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Re: Lehman LEH

Postby millionairemind » Sat Aug 23, 2008 10:51 am

Investor doubt over Lehman fund assets
By Henny Sender in New York
Published: August 22 2008 23:30 | Last updated: August 22 2008 23:30

Private equity firms looking at buying Lehman Brothers’ asset management business are expressing doubts about the unit’s minority stakes in several hedge funds.


Lehman is considering a variety of options to raise cash before its mid-September earnings report, which analysts expect to include writedowns of up to $4bn. The possibilities include a sale of a stake in Lehman itself or the sale of all or part of its asset-management arm or its commercial real estate portfolio.

Lehman shares were up 13 per cent in late trading on Friday after a Korea Development Bank official was quoted by Reuters as saying it would be “open” to acquiring Lehman.

The Financial Times reported on Thursday that KDB had talked to Lehman about buying a 50 per cent stake but failed to reach an agreement, according to people familiar with the negotiations.

The price under discussion was about 50 per cent above Lehman’s book value. Less specific discussions between Lehman and China’s Citic Securities also broke down, the people familiar with the talks said.

Lehman’s asset management arm is considered to be its crown jewel, but potential private-equity buyers are mainly interested in the core of that business, Neuberger Berman, a traditional equity investor.

These investors say they are less interested in acquiring Lehman’s minority stakes in hedge funds such as DE Shaw, GLG and Ospraie. GLG and Ospraie have veto power on a sale of Lehman’s stakes in them, and they might be willing to buy the stakes back at bargain prices, officials say
. DE Shaw declined to comment.

Selling assets is tricky for Lehman. If it sells them for less than its own estimates of their value, it could be forced to mark down the value of other holdings, forcing it to raise even more capital.

Lehman bought the hedge fund stakes in recent years when valuations of such companies were at their cyclical peak. Lehman took a $100m second-quarter writedown on its stake in publicly listed GLG, indicating that its other hedge funds stakes lost value.

GLG, with $23bn in assets under management, said during the second quarter that the value of its investments would have to rise by about $740m for it to be able to earn its “carry” – the 20 per cent of profits hedge funds keep once they have reached a certain performance level.

Since GLG reported second-quarter results, hedge funds, in general, have performed poorly.

Hedge funds were hurt in July as oil prices fell and bank shares rebounded because many were still positioned to benefit from rising energy prices, a falling US dollar and financial turmoil.

The rout intensified in August and the carnage spread to hedge funds employing a variety of strategies, managers of funds that invest in hedge funds say. Andor Capital Management, a hedge fund with about $2bn under management, said this week it was shutting down.
Copyright The Financial Times Limited 2008
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Re: Lehman LEH

Postby millionairemind » Mon Aug 25, 2008 9:30 pm

KDB warned against buying Lehman
BySong Jung-a in Seoul
Published: August 25 2008 10:48 | Last updated: August 25 2008 10:48

South Korea’s top financial regulator on Monday warned that Korea Development Bank should take a “cautious” approach to buying an overseas bank, following the state-run group’s expression of interest in Lehman Brothers .

Jun Kwang-woo, chairman of the Financial Services Commission, said he was “aware” that KDB was considering the possibility of buying a global investment bank, but he stressed that such a deal should be led by private lenders.

“In principle, taking over a global investment bank can become an opportunity to raise the capability of the [Korean] investment banking business,” Mr Jun said. “But at the same time, as the risks are also big, KDB should take a cautious approach.”

“We welcome any efforts led by the private sector to go global, but it may not be proper for state-owned financial institutions to lead the role and take on excessive burdens,” he added.

The Financial Times reported last week that KDB had talked to Lehman about buying a 50 per cent stake but failed to reach an agreement, according to people familiar with the negotiations.

On Friday, a spokesman from KDB told reporters that buying Lehman was still a “possibility”, news which sent Lehman shares up as much as 13 per cent.

South Korea plans to privatise KDB by 2012 in a gradual process. A holding company will be set up this year and part of it sold through an initial public offering.

Sung Ju-yung, a KDB spokesman, on Monday said: “We are just thinking about various options [to raise competitiveness] as the bank is to be privatised.” But he declined to comment on KDB’s interest in Lehman.

Lehman is considering a variety of options to raise cash before its mid-September earnings report, which analysts expect to include writedowns of up to $4bn. The possibilities include a sale of a stake in Lehman itself or the sale of all or part of its asset-management arm or its commercial real estate portfolio.

Min Euoo-sung, KDB’s new chairman, had told a press conference last month that KDB will actively seek overseas takeovers to take advantage of the sluggish global financial markets. He said the US subprime meltdown provided a good opportunity to expand KDB’s overseas investment.
Copyright The Financial Times Limited 2008
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Re: Lehman LEH

Postby kennynah » Mon Aug 25, 2008 9:37 pm

then better sell Calls on them ??? but it takes guts...the volatility is very high at ~185%... so... it means, that in a year, it has abt ~68% chance of price swinging either way by 185%..so how like dat?
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Re: Lehman LEH

Postby millionairemind » Mon Aug 25, 2008 9:40 pm

K - You options guru... sure got a way to profit from this one... don't baydeh baydeh :lol: :lol:
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Lehman LEH

Postby kennynah » Mon Aug 25, 2008 9:43 pm

mm : no man.... i think i wan to just buy stocks from now onwards... the more i know abt options...the more i realize i super goondu on this vehicle... hahaha...

but frankly, i think on LEH, we must be very careful....it's just an investment house... as long as it cannot garner customer and partner confidence...they are done for... no one wants to trade with them...they will be screwed...no one wants to park money with them...they eat grass..
they are not like banks, where they have retail deposits...and have traditional brick n mortar financial services to tahan this down turn...
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Re: Lehman LEH

Postby millionairemind » Fri Aug 29, 2008 10:46 am

Lehman Brothers plans to lay off 1,500
By Jenny Anderson and Eric Dash Published: August 28, 2008

Lehman Brothers, the ailing Wall Street bank, plans to lay off as many as 1,500 employees, or nearly 6 percent of its work force, before it announces third-quarter results on Sept. 15, a person briefed on the plans said Thursday.

Lehman has already laid off 6,000 people since June 2007, mostly in its mortgage origination and securitization businesses. It was not immediately clear what divisions would bear the brunt of the new cuts, but virtually every Wall Street business is struggling, and investment bankers and traders at Lehman are anticipating cuts.

A Lehman spokesman declined to comment.

The bank is scrambling to piece together a plan to shore up its finances before it announces its third-quarter results. Those results are expected to be grim, and investors expect the bank to take dramatic steps before it announces write-downs that analysts say could be as much as $4 billion and an estimated loss for the quarter of $3.30 a share.

At the heart of Lehman's woes is a balance sheet bulked up with assets that are steadily losing value, including about $61 billion in mortgages and asset-backed securities.

Executives are examining many options, including the sale of Lehman's investment management division, which includes Neuberger Berman and is expected to fetch anywhere from $7 billion to $10 billion. Other options include the sale of about $40 billion of troubled commercial real estate, and the creation of a separate unit that would be owned by Lehman shareholders and house all of Lehman's toxic assets, freeing the investment bank to try and move forward.

People briefed on Lehman's plans say an ideal situation would be to separate the toxic assets into a separate unit and then recapitalize the investment bank with the proceeds of a sale of Neuberger and perhaps a capital infusion from abroad.

But a handful of analysts have suggested that selling Neuberger would hurt Lehman's earnings potential too much. The firm's fixed income, investment banking and trading units are under serious pressure.

Lehman's stock has been rattled by persistent rumors about what the firm's next move will be. Last week, the stock fell 13 percent and rose 16 percent on two separate days. The shares have lost 73 percent of their value this year.

Top Lehman executives have been knocking on doors all over the world seeking a capital infusion, courting sovereign wealth funds and international investors including the Korean Investment Corporation. Citic of China and the Korean Development Bank, a far smaller, state- owned entity.

But a white knight has not come forward and another bad quarter — Lehman lost $2.8 billion in the second quarter and was forced to raise $6 billion in equity — will be difficult to manage in the deteriorating environment.

The bank has taken steps to try and shore up its capital and reduce the risk of its balance sheet. In the second quarter it shed $147 billion in assets, $22 billion of which were illiquid assets.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Lehman LEH

Postby ishak » Sun Aug 31, 2008 2:04 am

Lehman nears plan for real estate assets
REUTERS, 30 Aug 2008

Lehman Brothers Holdings Inc. has settled on a structure that will allow it to offload billions of dollars in real-estate loans from its books, according to the on-line edition of the Wall Street Journal.

The firm is still working out the final details and it isn't clear when a plan will be unveiled, the Journal reported, citing the difficulty of finding financing for a spinoff or sale of these assets.

Lehman has also been looking for buyers for its asset management arm Neuberger Berman.

According to the Journal, Lehman has created a so-called good bank/bad bank structure for the real estate assets, which would likely involve a spinoff of the holdings to shareholders as well as an investment by outside investors.

A Lehman spokesperson could be immediately reached for comment.
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