Lehman Brothers: Facts vs. Fiction

Great read on Lehman ...
They are making strides to keep things above water.
I really feel the damage is already done.
Time will tell.

The internet bears are congratulating themselves today, but the stock is trading at last weeks levels when the rhetoric heated up.

A flat stock is a win, although you cant eat relative performance.

There was no reason to get long before the capital raise, so now the real battle begins.

I would rather buy LAZ on weakness, around $35, than LEH however.

Sj

Hey Tom and Stockjock.  How do you feel about LEH today ($25)?  MER downgrades just days after their upgrade last week.  Would you really take the advice of David Trone of Fox-Pitt over David Einhorn?  Do you think Einhorn banked over $100 million last year because he is “inexperienced at looking at financials”?  I laugh at all the naivety all the time when it comes to Wall Street.  Like the guys who show up at a Marriott to become professional traders and “beat the Market” for a $200 seminar.  When will most of you naive pups understand that the top hedge funds are the saviest on Wall Street and that they attract “MAJOR, MAJOR, MAJOR” talent.  Do you really think you are going to beat them?  Obviously if you’re still long LEH at 34 from your last post, you will never.  Why when it comes to finance to people understimate talent?  I bet there are very few over the entire WWW that would think they could beat MJ in a game of one on one.  Stop espousing your disallusioned crap.

Signed,

A very successful professional prop trader of his own securities firm who is still short LEH!

Tom,

Congratulations on your trade. Perhaps you should read more than one post on this site. I think I have done a decent job presenting both sides of this argument.

Shorting the stock last week going into the deal they were telegraphing was a no brainer, and then $28 was the new line in the sand.

Both sides were cherry picking numbers that buttressed their case, and apparently Trone even apologized to Einhorn for calling it a “flimsy” case.

As a trader you don’t care about the ratios involved, but certainly you can pick one that suits you.

The cult of the value manager, not Einhorn in particular, is overrated. Bill Miller, Eddie Lampert, Rich Pzena, etc etc. Whitney Tilson is down 25% over the last year in TILFX, and Ackman really misstimed TGT.

They have all fallen hard, Einhorn will hopefully escape a similar fate, but it just goes to show you.

You might want to read the disclaimers at the end of the post, and I have written critically of Lehman, at much higher prices.

And you can’t buy the fins until they are done raising money. Go read the El-Erian post.

I am glad you are making money, but you seem to be a bit emotional. It could be your achilles heel, you might want get it under control, like a real pro.

good trading,

SJ

Who said I was long ??
......
I am a futures trader where the real juice is.

SJ,

Touche in your assessment of my emotion.  It has on occasion been an Achilles heel.  But I’m sure most if not all successful traders would say they are emotional, particularly when you are in the midst of trading.  I guess the hunger to win versus the fear of losing I constantly battle makes me who I am.  Fourteen years and running my own prop firm as a one man show and still going.  I apologize if I was a bit heavy-handed with my words.  They weren’t intended specifically at you but more generally to the public who constantly amaze me when it comes to their investment naivety.  People really do spend much more time researching a new Hi-Def flat panel or a new auto versus when they decide to throw their hard earned coin at an investment.  I guess it’s the allure of the quick buck, just like Vegas.  Good luck to you in your trading as well SJ.

Gmof

No worries guys, appreciate the banter.

It is a remarkable day and emotions are running high.

I have no love lost for Lehman, their institutional sales people screwed me several times.

My point with this post was more to point out how the ratios can be twisted around to suit your point, and you can even find some that make Goldman look worse than Lehman.

And that is something I have been waiting to unfold, Gasparino caught grief over Lehman but Faber was defending Goldman around 10AM today.

Will the stock crack and trade down to $140ish?

BTW you guys should consider joining twitter. There are some good things going on there, and more frequent commments on ths situation, like this post yesterday from me

I am heading to beach the minute $LEH breeches $28, somebody pls lean on that pig 09:30 AM June 10, 2008

thanks for reading guys! BTW i know a guy that wants to join a prop shop, put down 100k deposit, and go 20 to 1 intraday, carry some overnights. If you can help send me email. He works at a hedge fund right now, is very good.

SJ

I think this proves my earlier point.  Asset classes (in this case LEH)can move far beyond what the general consesus thinks is possible and is where the big $ is made.  Another eg: FRE and FNM today.  I think this also proves that one should side with someone with the talent of Einhorn than a buy or sell side analyst and that most people underestimate the talent and thorough anlaysis of the top traders in the world.

Well, as a long time buysider, you are preaching to the choir.

Both sides had their axes to grind, although i think Einhorn spoke with conviction, yes money was involved but he did believe passionately.

Most of the flip flops on the sell side are the result of buysiders convincing them of the errors of their way, trone never caved though. stubborn?

nothing is good until this recapitalization ends, it is remarkable how long the XLF held above $24. This has played out in slo-mo over the past year.

I dont have a problem with Einhorn per se, but the implosion in the value crowd proves one of my points...these guys are not infallible. Einhorn’s number ok considering he is long biased, but the Value Gurus are a disaster.

Got anything to say about BLK? just curious…

I won’t labor my point, you can re-read the blog.  End of Story!

end of story indeed...Einhorn et al finally getting paid on TGT and BGP etc...Tilson has had a big comeback last month or two.

Post mortem might focus on Fuld’s actions....maybe decisive action would not have mattered. I am stunned he did not swing the bat last few weeks..Koreans probably would have lost entire investment had they made it however.