Lost for words.

Exactly a year back, Bear Stearns was trading at $150 per share.

It got sold out to J P Morgan for $2 per share.

98.6% of value lost - most of it due to mortgage-based securities.

__________________
Read All Rules Before Making Any Post | E-Investing on Google+

Could somebody please tell me how did those guys at JPM zero in on $2 per share when the building that Bear owns itself is more than $ 1 billion and when the FED has guaranteed close to $30 billion of its CDO assets. I think JPM has got Bear Stearns for dead cheap a price. $236.2 million is definitely not justifiable for the fifth largest IB in the world.

I mean come on... $2 is like close to 80 INR/ share, I am really curious to know how they reached the figure $2 when the last traded price on Friday was $30. I mean you can say that its because of uncertainty and that its balance sheet is severely constrained by interest payments... and in the event of further drop down in prices it may have to sell the CDOs for dirt cheap prices... liquidity crunch.. loss of face.. loss of customers.. etc.. etc. but $2 is dirt cheap.. even bankrupt companies get a better deal... I would really want to know the inside story.. Does anyone have it??

A company is not just valued with its assets, you also have to look at its liabilities.

Many analysts believe that in current market conditions, Bear Stearns actually has a negative value..... its liabilities exceed its assets.

Many of the mortgages that it holds have no buyers and if Bear Stearns tries to liquidate the mortgages, these "assets" will bring almost nothing.

__________________
Read All Rules Before Making Any Post | E-Investing on Google+