Will Bove’s Bear Bottom Get Spanked?

Raymond James has seen many journeyman analysts move through its equity research department over the years, including Dick Bove. He loves the spotlight, but until recently the Street has ignored him, as one IM I received today clearly illustrates:

when he was at raja, no one gave a damn

Bove has moved on to Punk Ziegel. And while his recent calls on Citigroup might end up being correct, his timing leaves something to be desired:

1/16/08-Citigroup shares are "cheap", Punk Ziegel's Bove says- Bloomberg (26.94 )

12/14/07-Citigroup may keep dividend after SIV purchases; shares a "very good buy", says Punk Ziegel's Bove - Bloomberg (30.40 )

His coverage extends to the stock of Bear Stearns as well. Bove upgraded Bear to Market Perform on February 4th, putting in the top-tick, but the stock's $30 point slide since led him to get negative on the stock earlier today, slashing the price target to $45 from $90 and suggesting they need to find a merger partner. Will he also put in the Bottom-tick? The swoon to $55 mid-day was his handiwork.

But the Fed's move today should grease the wheels again, and Bear is not going down without a fight.

Indeed, Tony Crescenzi is claiming that primary dealers hold $60.2 billion in mortgage-backed securities, and the fed facility could apparently accommodate this amount and the $139.7 billion in agency securities they also hold.

And Joe Lewis, whose investment in Bear, assuming it is unhedged, is down several hundred million, leading him to make some noise, although it might be a bluff:

Joseph Lewis, the second-largest shareholder in Bear Stearns Cos., may add to his holdings after the stock fell on speculation the company lacks sufficient access to capital, a person close to him said.

Lewis, a 71-year-old billionaire who began building his Bear Stearns stake in September, views the investment as long-term and isn’t bothered by the falling share price, the person said, declining to be identified because Lewis doesn’t make public statements about his holdings. Bloomberg

Bear continues to counter punch the rumors:

Bear Stearns said ``there is absolutely no truth to the rumors of liquidity problems’’ and Chief Executive Officer Alan Schwartz said company finances ``remain strong.’’ The firm will probably have $1.9 billion in additional writedowns in the first half of 2008, Deutsche Bank AG estimated in a report today.

It is probably time new Bear CEO Alan Schwartz made an appearance. Why is Ace Greenberg doing the heavy lifting?

The volume in Bear’s stock has been enormous over the past two days, is the Bear bottom in? An analyst downgrade and blow off in trading volume often do the trick, but routing the numerous bears in Bear could take longer than a day.

The rally in the S&P 500 was a 3+ standard deviation event, as the shorts are sure to point out later.

Nobody is calling Bernanke a genius yet. But if Bear rallies sharply Bove’s 15 minutes of fame might finally be up..

Although one of his former salesman was probably a little harsh in saying “ I thought he was an arrogant blowhard”

Ah, the joys of working on Wall Street.

Bear Stearns Investor Lewis May Increase His Stake
Bloomberg

Bear Stearns falls as financial-sector stocks rise
Reuters

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