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Reply #13: Writedown bug could bite Lehman [View All]

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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu May-29-08 05:48 AM
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13. Writedown bug could bite Lehman
NEW YORK (Fortune) -- Lehman Brothers has some explaining to do.

Shares of the big brokerage firm have dropped 13% over the past three days amid renewed questions about the health of Lehman's (LEH, Fortune 500) balance sheet. The setback comes just over a month after finance chief Erin Callan led a public relations blitz that aimed to dispel worries about Lehman's financial standing following the collapse of rival Bear Stearns (BSC, Fortune 500). Callan's efforts were aided by a surprisingly solid first quarter earnings report and a $4 billion preferred stock sale that was strongly oversubscribed.

But David Einhorn, the manager of the Greenlight Capital hedge fund, reopened the case against Lehman in a speech Wednesday. Einhorn, who along with any number of other value-oriented, long/short hedge fund managers is short Lehman, says the firm hasn't taken sufficient writedowns on its $6.5 billion collateralized debt obligation book to account for the sharp decline in the value of this sort of paper. Einhorn laid out his argument in a speech at the Ira Sohn Investment Research Conference.

.....

Of course, according to its 10-Q filing, at the end of the first quarter Lehman had $786 billion in total assets. So the decision of whether to write down a billion dollars or two could easily fall short of materiality. But it's nearly impossible to carry off an argument that the 3% haircut Lehman has taken so far on its $6.5 billion portfolio is remotely adequate. Were Lehman to seek a buyer for the entire portfolio at once, a bid of 50% of face-value might be generous. Whatever Einhorn's motivation, it appears clear that the firm's investors would do well to brace for at least one more round of asset writedowns.

http://money.cnn.com/2008/05/23/news/companies/boyd_leh...
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  -STOCK MARKET WATCH, Thursday May 29 ozymandius  May-29-08 05:14 AM   #0 
  - Market WrapUp: Relatively Speaking, Things Are Not Looking Up  ozymandius   May-29-08 05:16 AM   #1 
  - KeyBank, Fifth Third, M&T Bank, Comerica  DemReadingDU   May-29-08 07:13 AM   #20 
     - I don't care much for key bank  skoalyman   May-29-08 09:06 AM   #48 
        - Similarly  ozymandius   May-29-08 09:16 AM   #52 
           - Ditto here, Ozy  Tansy_Gold   May-29-08 09:31 AM   #56 
              - I called my Congressman about this.  ozymandius   May-29-08 10:14 AM   #58 
                 - I totally relate Ozy and Tansy.  InkAddict   May-29-08 11:02 AM   #62 
                    - These combined scenarios is what makes me so f*@king mad.  ozymandius   May-29-08 11:42 AM   #64 
                       - They'll never experiance hard times  skoalyman   May-29-08 01:44 PM   #75 
                       - Welcome...  AnneD   May-29-08 01:51 PM   #76 
  - Today's Reports  ozymandius   May-29-08 05:18 AM   #2 
  - Initial Claims @ 372k - last wk rev'd up 3k - GDP books cooked upwards (LOL!)  UpInArms   May-29-08 07:34 AM   #24 
  - US jobless claims up; continued claims at 4-yr high  UpInArms   May-29-08 09:00 AM   #44 
  - This report again from the Ozymandius Bureau of Economics and Sore Brains.  ozymandius   May-29-08 09:07 AM   #49 
     - Nerver mind the spiral of death folk's were just making a fast decent  skoalyman   May-29-08 09:18 AM   #53 
        - Umm..I think they stopped passing out the peanut/pretzel snacks  InkAddict   May-29-08 11:08 AM   #63 
  - First-quarter GDP revised up to 0.9% as expected  UpInArms   May-29-08 07:41 AM   #25 
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     - Corporate profits != American workers prospering  Roland99   May-29-08 08:12 AM   #30 
     - Talk about cooked numbers.  Dr.Phool   May-29-08 08:29 AM   #36 
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  - Many of my friends work in trades  TrogL   May-29-08 12:50 PM   #71 
     - Then there are the govt. vehicles  TalkingDog   May-29-08 02:53 PM   #78 
  - U.S. retail gasoline prices rise a penny to new record  UpInArms   May-29-08 07:42 AM   #26 
  - Dow's price increases to hit household goods  ozymandius   May-29-08 05:27 AM   #5 
  - Stock up on napalm too.  MadinMo   May-29-08 08:14 AM   #32 
     - A lot of us did.  Dr.Phool   May-29-08 08:30 AM   #37 
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  - UPDATE 1-Honda CEO fears more price hikes for U.S. steel  ozymandius   May-29-08 05:55 AM   #15 
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  - Dallas Fed Richard W. Fisher speech: Storms on the Horizon  DemReadingDU   May-29-08 08:31 AM   #38 
  - Stock futures point to flat start ahead of GDP  ozymandius   May-29-08 05:43 AM   #11 
  - Goodbye, Bear Stearns  ozymandius   May-29-08 05:45 AM   #12 
  - I'm anxiously awaiting antigop's next scoop on this...  Prag   May-29-08 08:37 AM   #40 
  - Writedown bug could bite Lehman  ozymandius   May-29-08 05:48 AM   #13 
  - In a pinch, it makes great bait. Especially if you cut it in strips and microwave it.  TalkingDog   May-29-08 05:54 AM   #14 
  - I guess we'd better get used to it (urpiness, Spam and high prices).  ozymandius   May-29-08 06:02 AM   #16 
  - Hmmm, yeah let's get them all fed once we get the system of royalty payments and  54anickel   May-29-08 09:29 AM   #55 
     - That's what I try to do...  AnneD   May-29-08 02:31 PM   #77 
     - A must watch about Monsanto. They are EVIL!!!!!  xyouth   May-29-08 05:24 PM   #83 
        - Shit, man. Friends were just commententing about the apparently GM Marijuana seeds  Ghost Dog   May-29-08 06:25 PM   #84 
           - Green peace called it new in March 2008  xyouth   May-31-08 03:19 PM   #85 
  - There is even low-fat, low-salt Spam for the health conscious  DemReadingDU   May-29-08 07:48 AM   #27 
  - I will have to be pretty hungry to eat Spam.  MadinMo   May-29-08 08:18 AM   #33 
  - I used to buy a can every couple of years just to see if it was as bad as I remember.  Dr.Phool   May-29-08 08:33 AM   #39 
  - I'm there!  Prag   May-29-08 08:26 AM   #35 
     - Morning Marketeers....  AnneD   May-29-08 09:03 AM   #47 
        - Morning AnneD...  Prag   May-29-08 09:13 AM   #51 
           - Thenks...  AnneD   May-29-08 11:50 AM   #66 
  - Next stop...  Prag   May-29-08 08:25 AM   #34 
  - Signs of Worsening Credit Conditions  ozymandius   May-29-08 06:25 AM   #18 
  - dollar watch  UpInArms   May-29-08 06:58 AM   #19 
  - The cost of soaring public and private debt levels  UpInArms   May-29-08 07:16 AM   #21 
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  - State Street says data stolen from acquired company  UpInArms   May-29-08 07:28 AM   #23 
  - futures turning negative  ozymandius   May-29-08 08:01 AM   #29 
  - ~09:40 EST: Ring-a-ding-ding...  Prag   May-29-08 08:42 AM   #41 
     - edging into the positive range with frail, pawltry offerings  ozymandius   May-29-08 08:55 AM   #42 
        - " is much better than the alarmist recessionary talk"...  Prag   May-29-08 08:58 AM   #43 
  - Fed Governor Mishkin Will Step Down  DemReadingDU   May-29-08 08:14 AM   #31 
  - good riddance  ozymandius   May-29-08 09:01 AM   #46 
  - Auditor: Supervisor covered up risky loans  antigop   May-29-08 09:00 AM   #45 
  - 10:10 bounce-less  ozymandius   May-29-08 09:12 AM   #50 
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  - Is there a link to the FDIC report?  DemReadingDU   May-29-08 09:44 AM   #57 
  - Can't Leave You Folks Unsupervised At All!  Demeter   May-29-08 10:24 AM   #59 
  - I was wondering what happened to you...  Prag   May-29-08 10:29 AM   #60 
  - If you live near a public library, Use the computers they buy  TalkingDog   May-29-08 10:57 AM   #61 
  - That's Where I Am Right Now--The Library  Demeter   May-29-08 03:30 PM   #80 
  - I was starting to think that I smelled bad.  ozymandius   May-29-08 11:46 AM   #65 
  - Traders start passing around the after-lunch hooch.  ozymandius   May-29-08 12:35 PM   #67 
  - Rates on 30-year mortgages jump to 11-week high  ozymandius   May-29-08 12:37 PM   #68 
  - Reason for party? Wall Street jobs cuts may only hit 25,000: report  UpInArms   May-29-08 12:41 PM   #69 
  - Loonie Watch  TrogL   May-29-08 12:42 PM   #70 
  - TPM: More on "Foreclosure Phil" (Gramm)  antigop   May-29-08 01:01 PM   #72 
  - Article on UBS from July, 2007 in The Economist  antigop   May-29-08 01:05 PM   #73 
  - We Need a Theme Song Entitled "Schaudenfreude"  Demeter   May-29-08 03:34 PM   #81 
  - Motherjones: "Foreclosure Phil"  antigop   May-29-08 01:07 PM   #74 
  - Phil Gramm, UBS, Uh Huh, thanks, antigop. n/t  Ghost Dog   May-29-08 02:56 PM   #79 
  - End of bidness  ozymandius   May-29-08 04:37 PM   #82 
 

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