March 18, 2008

Bear Stearns By the Numbers

E J Dionne's fatuous analysis of Bear Stearns led me to take a look at their stock chart. Bear Stearns has 118.1M shares outstanding. A month ago they were valued at 80 dollars a share. Over the weekend the Fed forced a sale at 2 dollars a share to JP Morgan/Chase. That's a haircut of 97%. Essentially Bear Stearns stockholders are being told that their thrashing around bleeding cash is worth a "go away" payment of 3%. For E J Dionne, that's Wall Street turning into "a bunch of welfare clients".

The real story is that Bear Stearns executives do seem to have tried to mau mau the Fed but the Fed instead forced a sale whose terms are so harsh that Bear Stearns shareholders may not approve, a threat realistic enough that bondholders (who make out better in the Fed forced deal) seem to be buying up stock and bidding BSC's share price to 5 dollars Monday and almost 6 dollars Tuesday.

It's going to be an interesting episode in managed capitalism but educational only if you pay attention to the details, especially the numbers.

Posted by TMLutas at March 18, 2008 11:15 PM