You are viewing an obsolete version of the DU website which is no longer supported by the Administrators. Visit The New DU.
Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

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

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Latest Breaking News Donate to DU
ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu May-29-08 05:48 AM
Response to Original message
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.
Printer Friendly | Permalink |  | Top
  -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 
     - U.S. economy grows slightly better than expected  Ghost Dog   May-29-08 07:56 AM   #28 
     - 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 
  - Oil slips ahead of US inventory report  ozymandius   May-29-08 05:20 AM   #3 
  - Exxon Mobil leader keeps both hats  ozymandius   May-29-08 05:24 AM   #4 
  - Gas guzzler graveyard  ozymandius   May-29-08 06:09 AM   #17 
  - 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 
  - Honda intent on saving US jobs by switching models  ozymandius   May-29-08 05:31 AM   #6 
  - UPDATE 1-Honda CEO fears more price hikes for U.S. steel  ozymandius   May-29-08 05:55 AM   #15 
  - AP source: GM plans more restructuring measures  ozymandius   May-29-08 05:34 AM   #7 
  - Sears Holding swings to 1Q loss on markdowns  ozymandius   May-29-08 05:37 AM   #8 
  - Costco 3Q profit climbs 32 percent, tops outlook  ozymandius   May-29-08 05:39 AM   #9 
  - Inflation-wary Fed looks ahead to rate increases  ozymandius   May-29-08 05:40 AM   #10 
  - 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 
  - State Street tells employees, some customers of data theft - MarketWatch  UpInArms   May-29-08 07:19 AM   #22 
  - 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 
  - FDIC Report shows big banks in trouble  UpInArms   May-29-08 09:29 AM   #54 
  - 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 

Home » Discuss » Latest Breaking News Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC