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Lehman Watch Thread
Posted on 8/21/08 at 8:14 am
Posted on 8/21/08 at 8:14 am
NOTE: I have no short positions or personal monetary interest in Lehman of any kind. I'm just watching the stock for fun, and I don't know what's actually going to happen to it.
From CFO.com on 6/12/08, " Lehman's Erin Callan: From Spotlight to Footnote":
The story noted that, "She embraces television, appearing frequently. She receives a slimmer daily financial summary than her predecessors, relying more on data from the trading-floor contacts built during her 13-year Lehman career."
As part of her public relations campaign, she was doing everything she could to get media and magazine coverage of her own personality and appearance, and it worked ( LINK):
That's a bad signal to send in my opinion. Moving on...
From the Monday, 8/18/08, edition of The Wall Street Journal, " Lehman Faces Another Loss,
Adding Salt To Its Wounds":
From Tuesday's article, " Credit crunch may take out large US bank warns former IMF chief":
From CFO.com on 6/12/08, " Lehman's Erin Callan: From Spotlight to Footnote":
quote:
Suddenly, Erin Callan is out as chief financial officer of Lehman Brothers — only a few months after becoming Lehman's main voice in dealing with a raft of troubles, including a very public sparring match with hedge fund activist David Einhorn.
...
A glowing story about her in the Wall Street Journal on May 17 called her "a galvanizing force at Lehman and a finance chief who topples much of the conventional wisdom about CFOs." That "wisdom" appeared to be that CFOs are staid, media-slow, and male. ...
The story noted that, "She embraces television, appearing frequently. She receives a slimmer daily financial summary than her predecessors, relying more on data from the trading-floor contacts built during her 13-year Lehman career."
As part of her public relations campaign, she was doing everything she could to get media and magazine coverage of her own personality and appearance, and it worked ( LINK):
quote:
Indeed, Ms. Callan is as far as possible from the stereotype of the dowdy female Wall Street exec who plays down her feminine appearance by cloaking herself in shapeless pantsuits and eschewing makeup and accessories that draw attention to her gender. Ms. Callan is known as something of a Wall Street fashionista, in fact.
Meredith Whitney, the Oppenheimer analyst who has elsewhere been profiled in these pages for her smart calls on Citibank’s stock and a glass-ceiling breaker in her own right, has called Callan is the "best accessorized" CFO on Wall Street.
That's a bad signal to send in my opinion. Moving on...
From the Monday, 8/18/08, edition of The Wall Street Journal, " Lehman Faces Another Loss,
Adding Salt To Its Wounds":
quote:
...
With the end of the New York company's fiscal third quarter less than two weeks away, some analysts are girding for a loss of $1.8 billion or more, instead of the modest profit they previously expected. If the dour projections come true, Lehman's losses since the start of March would total at least $4.5 billion -- or more than the firm churned out in profit during fiscal 2007.
The likelihood of back-to-back quarterly losses, fueled by widely anticipated write-downs in a portfolio saddled with more than $50 billion in risky real-estate and mortgage assets, puts even more pressure on Lehman Chairman and Chief Executive Richard S. Fuld Jr. to show that the losses won't keep piling up. If they do, Lehman could need to raise additional capital beyond the $6 billion it got in June.
... Lehman is aiming to further winnow its exposure to risky assets by at least 20% a quarter, two Wall Street analysts said last week.
But those moves aren't coming fast enough to offset the misery caused by continuing stress in the housing market, where prices are falling with no end in sight. For example, Lehman holds $10.2 billion of Alt-A mortgages, or loans made to borrowers who didn't fully document their income. The firm has an additional $11.5 billion in exposure to leveraged-buyout financing.
David Trone, an analyst at Fox-Pitt, Kelton, predicts that Lehman will write down its Alt-A portfolio by about $1.7 billion, or 17%, at the end of the current quarter.
J.P. Morgan Chase & Co.'s write-down of $1.5 billion in Alt-A and other mortgages, disclosed in a securities filing last week, also prods Lehman to take its own haircut on home-loan exposure ...
From Tuesday's article, " Credit crunch may take out large US bank warns former IMF chief":
quote:
Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely.
This post was edited on 8/22/08 at 3:55 am
5
Posted on 8/21/08 at 8:14 am to Doc Fenton
Here's a Reuters story from Wednesday that showed up on Yahoo! Finance ( LINK):
From the Thursday, 8/21/08, edition of The Wall Street Journal, " Fed Acted on Lehman Rumor":
Lehman's last 10-K filed with the SEC (dated 1/29/08): LINK.
Lehman's last 10-Q filed with the SEC (dated 7/10/08): LINK.
So that's about $250 billion in assets at Lehman's measure of fair value (note that their consolidated financial statement is marked "unaudited"), over $72 billion of which are categorized as "mortgage and asset-backed securities."
Share Price = $13.73
52-Week High = $67.73
Current Market Cap = $9.53 billion
Verrrry interesting...
quote:
Lehman couldn't secure Korean Funds: report
Wednesday August 20, 5:54 am ET
(Reuters) - Lehman Brothers (NYSE:LEH - News)
Chief Executive Dick Fuld nearly struck a deal to raise almost $5 billion from South Korean wealth funds and institutions but the pact disintegrated, the New York Post said citing sources familiar with the matter.
One source told the paper that Lehman was aiming to raise more capital than the Korean investor was willing to invest at the time.
...
From the Thursday, 8/21/08, edition of The Wall Street Journal, " Fed Acted on Lehman Rumor":
quote:
...
Responding to a July rumor that Credit Suisse Group planned to pull a line of credit to Lehman, Federal Reserve officials called to see if it was in fact true, according to these people. Credit Suisse told Fed officials there was no truth to the rumor ...
...
... Lehman has complained that its problems have been fodder for vicious, unfounded rumormongering by traders who profit when the firm's share price declines.
Lehman has repeatedly denounced negative speculation, even calling individuals believed to be spreading rumors and trading desks said to be skittish about doing business with the investment bank.
...
Fed officials contacted Credit Suisse last month, but it isn't clear if the move occurred before or after the Securities and Exchange Commission subpoenaed dozens of hedge funds and financial firms about four Lehman-related rumors. One person familiar with the rumor said it was circulating in early July.
Last month, the SEC also put limits on short-selling of 19 financial stocks, including Lehman, aiming to crack down on abuses. The temporary rules expired last week.
...
When the Bear Stearns crisis erupted in March, Lehman and other Wall Street firms criticized the SEC for not responding more aggressively to rumors that essentially caused a run on the bank, forcing Bear's emergency sale to J.P. Morgan Chase & Co. At the time, Fed officials called at least two major banks rumored to have stopped trading with Bear and were told that wasn't true.
...
The flurry of rumors about Lehman has died down since the SEC's actions. But the New York firm's results for the fiscal third quarter ending Aug. 29 are expected to be bleak, with some analysts forecasting a net loss of more than $2 billion.
...
Lehman's last 10-K filed with the SEC (dated 1/29/08): LINK.
Lehman's last 10-Q filed with the SEC (dated 7/10/08): LINK.
quote:
Assets at Fair Value as of May 31, 2008 (In Millions)
(Type, Level 1, Level 2, Level 3, Total)
Mortgage and asset-backed securities, $347; $51,517; $20,597; $72,461
Government and agencies, $11,002; $15,986; —; $26,988
Corporate debt and other, $77; $44,332; $5,590; $49,999
Corporate equities, $26,785; $10,606; $10,158; $47,549
Commercial paper and other money market instruments, $4,757; —; —; $4,757
Derivative assets, $2,597; $39,395; $4,999; $46,991
ALL, $45,565; $161,836; $41,344; $248,745
So that's about $250 billion in assets at Lehman's measure of fair value (note that their consolidated financial statement is marked "unaudited"), over $72 billion of which are categorized as "mortgage and asset-backed securities."
Share Price = $13.73
52-Week High = $67.73
Current Market Cap = $9.53 billion
Verrrry interesting...
This post was edited on 8/22/08 at 3:55 am
Posted on 8/21/08 at 9:26 am to Doc Fenton
What is the typical salary structure of an investment wanker?
Don't these guys make most of their money off of year end bonuses? They have to be hurting...
Don't these guys make most of their money off of year end bonuses? They have to be hurting...
Posted on 8/21/08 at 4:01 pm to Doc Fenton
quote:
From the Monday, 9/18/08, edition of The Wall Street Journal, " L
Dude, you know the content of these articles a month ahead of time and you aren't making $$$$$ off the content???
Posted on 8/22/08 at 10:36 am to Doc Fenton
Not that I can shed any light on the economics of the Lehman Brothers situation, but FWIW I am employed by Lehman in one of their subsidaries and I am being layed off next week. It literally came out of no where about two and a half weeks ago. The whole mortgage lending crisis did them in.
Posted on 8/25/08 at 2:18 pm to Doc Fenton
From Fortune's "Daily Briefing" by Colin Barr ( LINK):
quote:
Daily Briefing
By Colin Barr
August 25, 2008, 10:01 am
Lehman chief under fire
The big Lehman Brothers (LEH) story Monday is that CEO Dick Fuld is on the ropes. The Observer newspaper, citing “well-placed sources within the bank,” reported over the weekend that Fuld faces a “planned coup” that will force him out by year-end. ...
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