My blog is brand new and so I have low (read no) expectations of recieving any replies.
That said what are your thoughts? If BSC had been purchased by JPM for $2 a share in stock why is it trading at $6. The government has already approved the deal. Can't we just buy JPM and short BSC and profit on the spread? What am I missing? What rumors have you heard regarding a better bid?
I look forward any responses.
Your opinion wanted: Why is Bear Stearns trading at $6 when it's been purchased at $2?
Posted by
Nick
at Tuesday, March 18, 2008
Labels: Arbitrage, Credit Markets, Efficient Market Theory
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5 comments:
Here is Poll with another blogger wondering the same thing
There may be a few reasons:
a. Employees own about 30% of the company. Shareholder approval at BSC is necessary for this deal to go through and it is unlikely any of the employee shareholders are in a generous mood
b. It is believed in some circles that BSC agreed to a low price deal fully knowing that the shareholders will balk and the deal will eventually not complete. This is a way of playing for time while at the same time getting JP Morgan to guarantee their debt portfolio
I personally think that a message was sent to the markets and now whether the deal completes or not is not relevant to the feds. I may have to review the thesis on this but BSC may actually be a good buy right now
Wish I had actually followed through on my urge to buy Bear Stearns last week!!!
It's Mark from VIN. Let's trade links. What is the best way to send you an email? VIN?
Part of it due to the fact they're expecting some flak from major shareholders. Mr Lee, for example (Joseph?) owns 9.8% of BS, and he paid and average of $107 a share.
How must it feel to be down several billion dollars on a single position??
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