Balance Sheet Checker (BSC)

Beware the Financials Value Trap

Since assets - liabilites = equity, I think what you meant to say about Bear Stearns was:

"...for every $33 in assets they had, they had $32 in liabilities."

It doesn't sound nearly as dramatic, but it is accurate.

Bear Stearns Bailout The Worst Fed Mistake Ever? Really?

The Fed will has explicitly signaled that rather than letting market forces determine the viability of a firm it will intervene to force a “stabilizing transaction”. In the case of Bear Stearns that transaction was at a price significantly below the book value and market price of the firm. The perverse result could, in fact, be massive destabilization as short sellers are emboldened by this very action.

The fact that Bear Stearns has never traded at-or-below JPMorgan’s offer price appears to signal the market's belief that Bear Stearns was/is actually worth more than the offer price (discounted for the likelihood that it will be taken over). Since “a government official advised Mr. Schwartz that a stabilizing transaction needed to be accomplished by the end of the weekend” it seems that the market was ultimately prevented from providing its own stabilization. Instead of supplying the short-term support that Bear Stearns apparently needed until the market was able to price its longer-term stability, the Fed-sponsored buyout gave a strong signal that short-selling the next target will be profitable. The Fed's actions set the precedent that it will not wait for, or encourage, the market to find a support level - it will withdraw lending in favor of a deal priced below any reasonable measure of value or support-level the market may be willing to provide if given adequate time. This will surely encourage future short selling.

In fact short selling financial institutions will be attractive even if the Fed doesn’t “stabilize” the next short target because neither will the market! The Fed has effectively removed any incentive for market participants to even try to provide support for the next target of a bear raid. If there turns out to be another run on a major financial institution the results will surely be much more damaging to the firm involved and to the Federal Reserves ability to promote confidence in the financial system. In that case calling the Fed's actions "the worst policy mistake in a generation" could turn out to be the understatement of a generation.

Backroom Bear Stearns Deal Exposed

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?

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? Is it possible that nothing about this deal is as we are being told?

Wow!

Backroom Bear Stearns Deal Exposed

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?

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? Is it possible that nothing about this deal is as we are being told?

Wow!

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

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!

Is the SEC Really to Blame for Bear Stearns?

Cayne selling for $10.84, JPM buying for $12.24. Why? Optics. Any other way would "look bad". This way it "looks good". Cayne got the short end of the stick, that naughty ultra-high-earner, and look at, oh, how badly JPM wants BSC so it must be really good after all. That must mean there wasn't really anything wrong with financial markets in the first place, just a bit of panic, that's all! But that's all behind us now, isn't it. Just how the fed wanted it played! Perfect!

JPMorgan's Actions Indicate Bear Was a Bargain

What do you think the odds are of this actually going through when 49.4% of the shares are owned by JPM, with the remaining 50.6% owned by not-JPM? Oh yeah! Plus you have to add in the other side of all the short sellers out there (to long buyers), meaning that there is a whole lot more than 50.6% of votes that are not-JPM. Now what do you think the odds are of this actually going through? Not to mention all the legal challenges that likely await. p.s. How will the shorts buy to cover when so many shares are now held by people who aren't selling because they have such a strong incentive to vote (JPM & BSC bondholders for/BSC sharholders against) this deal? Have you noticed the lack of volume on BSC lately? What turmoil will their inability to cover cause in the next few weeks? Can someone say "delisitng". Is this why BSC hasn't filed yet? The Fed has played this brilliantly. It should be fun watch it play out!

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

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?

A Conspiracy to Kill Bear Stearns?

By the way, helplessobserver, if you do sell your BSC shares (which I presume you hold) AND end up being right about other shareholders getting more money, would you have any claim on more money too? My guess is no, so why would you (or any BSC shareholder) sell their shares before this is finalized?

A Conspiracy to Kill Bear Stearns?

helplessobserver, you may be right, but it is important that the market doesn't percieve that to be the case. If the market buys your arguement then the stability of the deal is put at risk and therefore the stability of the financial system is too (which is how the Fed justified its role in this deal). I believe it is crucial to the Fed that the markets see this is a done deal. If it is a done deal then you truly are a helpless observer (I assume you hold BSC). If it is not a done deal then you just might come out further ahead then you are now. Although I don't think the Fed intended (or intends) to screw BSC shareholders, I also don't think anyone is losing sleep over the prospects of crushing vocal opposition to this deal if they felt the objectors were putting this deal at risk of permanently colapsing before stability is restored in the system. The timing of when markets return to normal will be everything on this one. This is why JP Morgan is rushing the deal through (lock this steal away before stability is here and the deal can be justifiably challenged) and BSC sharholders are fighting for a delay (if enough time can pass they might yet escape from their role as the sacrificial lamb in the All Powerful Fed's quest for permanent financial market stability). The heavy short selling of BSC stock suggests the market doesn't agree with you. They know the Fed won't let them be squeezed because if they were there could be a whole world of trouble.

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

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?

JPMorgan All But Locks Up Bear Stearns Vote

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?

JPMorgan All But Locks Up Bear Stearns Vote

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).

Bear Stearns’ Bailout by the Fed, JPM: A Century Old Conspiracy

Of course no one can present any facts about this so-called conspiracy because there is no conspiracy. If there was a conspiracy it would, of course, be easily verifiable by checking said facts. Of which clearly there are none. Everything is out in the open and there is nothing to see. Let's all just forget about all this fuss and get on with life as normal. Nothing happened here. Please move on. There is nothing to see.

Crises Averted, Not Crises Solved

As details of this deal come out how many times did you find yourself asking, "Is that even legal?!?!" It will be interesting to see who, if anyone, steps up to call them on it.