SERVING THE QUANTITATIVE FINANCE COMMUNITY

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Lehman

QuoteOriginally posted by: NicolasQuantWhy don't they consider floating the thing instead of being potentially ripped off by other financial institutions if they sell only a large chunk to a single investor?I suspect that counterarguments to a float are "time" and "trust" -- LEH doesn't have enough of either to ensure a rapid injection of sufficient capital.

Posts: 11048
Joined: February 1st, 2005, 11:21 pm

### Lehman

Nevermind.
Last edited by TraderJoe on September 10th, 2008, 10:00 pm, edited 1 time in total.

hedgefinan
Posts: 50
Joined: September 19th, 2006, 9:23 pm

### Lehman

We see that every month, negative news come in light about banks that their main activities are close related with alternative investments and hedge funds. We turn to passive management again?

NicolasQuant
Posts: 88
Joined: August 28th, 2008, 3:59 pm

### Lehman

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: NicolasQuantWhy don't they consider floating the thing instead of being potentially ripped off by other financial institutions if they sell only a large chunk to a single investor?I suspect that counterarguments to a float are "time" and "trust" -- LEH doesn't have enough of either to ensure a rapid injection of sufficient capital.Totally agree but they just said yesterday they have 42bn of cash-equivalents.Is that likely to be trusted by the market?Is that enough if all the street begins putting pressure on them?Is the management so incompetent not to having anticipated the massive LEH sell-off would imply getting a very very low bid, if any bid before bankruptcy, for Neuberger and other assets they own and still look valuable...

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Lehman

QuoteOriginally posted by: NicolasQuantQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: NicolasQuantWhy don't they consider floating the thing instead of being potentially ripped off by other financial institutions if they sell only a large chunk to a single investor?I suspect that counterarguments to a float are "time" and "trust" -- LEH doesn't have enough of either to ensure a rapid injection of sufficient capital.Totally agree but they just said yesterday they have 42bn of cash-equivalents.Is that likely to be trusted by the market?Is that enough if all the street begins putting pressure on them?Is the management so incompetent not to having anticipated the massive LEH sell-off would imply getting a very very low bid, if any bid before bankruptcy, for Neuberger and other assets they own and still look valuable...Although LEH does not face a short-term cash crunch, they do face the problem of approaching a point of negative equity. That $42 bn in cash won't go far when the$600 bn in creditors line up for payment. That negative equity point will be reached sooner, rather than later, if LEH's assets continue to deteriorate or if LEH can't hold costs below revenues. The trust factor comes in realizing that LEH may already be well past the negative equity point if it's assets are worth less than what LEH thinks they are.I'd say that Wall Street psychology and optimism, rather than incompetence, guided LEH management actions. If you keep thinking that the market has touched bottom, you're not going to pull the trigger on drastic actions (e.g. selling the crown jewels). The fact that the market will punish any show weakness means that everyone in an IB must show extreme confidence even if that confidence is erroneous.

Siberian
Topic Author
Posts: 298
Joined: June 25th, 2003, 8:56 pm

### Lehman

did anyone see handsome Mr. Ackman on CNBC? He had a put on lehman as an overall hedge, not a view, but was still able to make some good money he also talks about FRE FNM:First Segment: http://www.cnbc.com/id/15840232?video=8 ... ay=1Second Segment: http://www.cnbc.com/id/15840232?video=8 ... lay=1Third Segment: http://www.cnbc.com/id/15840232?video=8 ... ay=1Fourth Segment: http://www.cnbc.com/id/15840232?video=8 ... lay=1Fifth Segment: http://www.cnbc.com/id/15840232?video=850722382&play=1

Posts: 11048
Joined: February 1st, 2005, 11:21 pm

### Lehman

QuoteOriginally posted by: Traden4Alpha The fact that the market will punish any show weakness means that everyone in an IB must show extreme confidence even if that confidence is erroneous.This is deception and is what Enron did. Au revoir.

Siberian
Topic Author
Posts: 298
Joined: June 25th, 2003, 8:56 pm

### Lehman

NicolasQuant
Posts: 88
Joined: August 28th, 2008, 3:59 pm