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Friday, July 25, 2008

Lehman: Will Slowly Sell Itself Off



Can you say, “Damned if you do, and damned if you don’t?”

Lehman May Sell Neuberger Berman to Raise $8 Billion, CNBC Says: “Lehman Brothers Holdings Inc. may sell at least part of its Neuberger Berman asset management unit to raise as much as $8 billion, CNBC reported, citing people it didn't name.

A sale of the unit may make it difficult for Lehman, the smallest of the major Wall Street investment banks, to compete as an independent company, CNBC said.”

This is the same Lehman Brothers (LEH) that absolutely swore that they didn’t need to raise any additional capital as recently as a couple of weeks ago…

Anyways… Selling Neuberger Berman means the following:

1) Lehman really does need to raise capital, and lots of it.
2) Lehman actually tried to quietly raise capital, and failed.
3) Lehman is now left with no other option but to sell assets.
4) Lehman will have to sell the ‘good stuff’ and keep the ‘bad stuff’.
5) The end result will be a smaller, weaker Lehman.
6) Therefore Lehman can’t survive as an independent entity.

This should help put an end to the carefully orchestrated short covering rally in financials in general… Time to Go Ultra-Short, Again.

7 comments:

dougiefreshhh said...

I'm guessing China and the Saudi's have the $$$ to buy the good bits of these banks? Let the invasion continue....

Ben Bittrolff said...

Dougiefreshhh,

The democratic, capitalist west will be bought up by the dictatorial, formerly communist east. How cute...

Asia and the Middle East will use their trade surpluses to gobble up American and European assets.

Fun times ahead...

Anonymous said...

Let me guess about SKF: Within three days, a good trader purchased on the 200 and sold on the 50 today. It's called execution, and this guy is probably eating a steak at Moishes. Actually, two steaks, one on top of the other.

Regarding Lehman, following Bear Stearns... could it be that the big fish, say JP Morgan, for instance, will come out of all this stronger after the storm? Moreover, will event driven traders get in after the plundge knowing that LEH will be bought over? I was just wondering.

Charles Butler said...

Buy European assets? Perhaps, except for the fact that they're priced in euros.

dougiefreshhh said...

Yep, thats right Ben.

America will be a "cheap buy" and will it be a buyers market for Asia and Mid-East to come-a-shoppin' at the "great mall" of America. 1st floor - defunct banks, 2nd floor - foreclosed commercial properties, 3rd floor - the upper East Side of NYC.

Has DUG run out of steam?

Anonymous said...

Benny,

When are you starting the chicken little hedge fund. You know the one that increases as the world explodes and the sky falls.

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