Random thoughts about my interests which include (in no particular order) poker, finance & investing, politics, football and whatever else I happen to see that piques my interest

Monday, March 17, 2008

The end of BS

Well after looking at the markets today it seems the end of Bear Stearns is here. According to the stories I read, they have agreed to sell out to JP Morgan-Chase for the princely sum of $2 a share. That's right, not $200 or even $20 but $2 a share. Quite a comedown from the $160 or so the stock was at only a year ago. BSC was supposed to report their quarterly financials after the Market closed Monday too, and probably would have showed earnings around $1 a share but now have delayed their report. Hard to believe they could be sold so cheaply when they weren't even reporting a loss. On Thursday the stock closed at $57, on Friday at $30 and on Monday at $4

What it all seems to come down to is that BSC was running out of cash. Yes they had a lot of assets, hell they own their own building in Manhattan thats probably worth a billion bucks or more which would be 4-5 times the price of the buyout, but those assets were not liquid. They are holding on to a bunch of mortgage backed securities with no buyers at the moment, and clients were pulling their money out faster than BSC could get funds to pay them. Something had to give and it turned out, it was Bear Stearns. Apparently no other banks were willing to loan them enough to cover their shortfall till they could raise more cash. Of course BSC was no model citizen as they did not help out in the crisis brought on by Long Term Capital's failure in 1998. And 2 hedge funds they set up based on mortgage backed securities already imploded. Seems to me JPM played some real hardball to get BSC so cheaply. They get the building, the brokerage business and some other real assets. We'll see if that is better than the headaches they also inherit. Personally I think they got a bargain but I've been wrong before.

My kids have gotten me hooked on a TV show I never would have watched on my own. It's called Ninja Warrior. If you've never watched it before, 100 people take on an obstacle course with a time limit. If they make it through that there are 2 more totally different courses and then the final course. They all take balance, strength, endurance, nerves, speed, and great timing. Even pro athletes fail at it (Olympic gymnast Morgan Hamm didn't make it through the 1st stage, his brother Paul did and almost made it through stage 2) and when they fail they usually end up in a cold pool of muddy water. Not fun. Many people try going through the course in a whacky costume or in their work outfits. One guy has been in every tourney, 19 so far, and he always wears the uniform he wears to work. He was a service station attendant, now he manages the place. He has never won and in fact dislocated his shoulder on the last round one time. The announcing is cheesy but funny, some of the contestants are even funnier when they fall in the water but something about it makes me want to watch more. It's on G4 TV, if you get the chance I say CHECK IT OUT.

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