JPMorgan Buying Bear Stock on the Open Market at $10+

JPMorgan Chase & Co said it bought 11.5mm shares of Bear Stearns on the open market. With the purchase, JPMorgan owns about 12.98mm Bear shares, or about 8.9%. JPMorgan said it expects to buy more shares, potentially until it owns as much as 49.5% of Bear Stearns' outstanding shares.

- Reuters

Notablecalls: What the heck is JPM doing buying BSC stock above their own $10 bid? Is it because they know (or suspect) something...?

Related: JPMorgan's Actions Indicate Bear Was a Bargain

Comments

[mikeylikesit:]

It's because they want the deal to go thru and their $10 bid is almost fair. So, buy another 12 % of the company for a few pennies more and your $10/share investment is secure (and probably worth $20/share).

I wouldn't buy into this information though. If JPM is buying it all up at $11 then they want to ensure the prices stays at $10 by voting for the deal. So, you won't make money here.

If you own it right now... SELL it to JPM. They are bigger and stronger than you. They will get their way.

2008 Apr 04 09:08 AM

[Balance She...:]

It was interesting to note from the 13D filing that JP Morgan was a net seller of shares up until March 13th. (At their $2/share offer they could have used the procedes from their recent sales to buy 5.6% of Bear Stearns).

It is also interesting to see that on March 17, 18, and 19 JP Morgan bought 240,000 shares at an average price of $51.11 (when there was a $2 offer on the table). Can anyone suggest why?

2008 Apr 04 10:18 AM

[gebby:]

they are paying for votes

2008 Apr 04 04:19 PM

[GrapeApe:]

If JPM owns more than 50% of BSC, then they can virtually guarantee that they can own it all at roughly $10/share.

They apparently want BSC real bad.

2008 Apr 04 04:39 PM

[Balance She...:]

Here's what I can't figure out: With a significant portion of BSC shares sold short (15+/-?), who are the short sellers going to buy from when it comes time to cover their shorts? JPMorgan obviously won't be selling to them. The bondholders of BSC who were said to be buying shares to ensure the deal went through won't be selling to them. The people who bought or hold BSC expecting a higher bid (or something else to happen? such as Joseph Lewis?) probably won't be selling. Who does that leave? Is it possible JPMorgan bought all those shares from short sellers?

Even if JPMorgan does hold 49.5% of the shares it seems that the remaining "Longs" hold something like 65%, with the "Shorts" holding negative 15%. Wouldn't JPMorgan then need another 8%-to-16% to ensure this goes through. (+58% JPM, +57% "Longs", -15% "Shorts" *OR* +66% JPM, +65% "Longs", -31% "Shorts") Who is still selling shares of BSC besides the "Shorts", and how will they cover? Am I missing something here?

2008 Apr 04 06:08 PM

[Balance She...:]

I think I figured out what I was missing:

Has the public seen BSC's books lately (it didn't file its 10Q)?
Has JPM seen BSC's books lately?
How do the courts define insider trading?

Maybe JPM won't actually get to keep those shares?

Wow!

2008 Apr 06 01:42 AM