Stock Market News: Lehman Brothers Holdings (LEH) Sees Suitors
There is no doubt that Lehman Brothers Holdings (LEH) has been in trouble over the past few weeks. Indeed, the company has been frantically courting investment banks and other entities all over the world, most notably in Asia. But some of the specs on Lehman have given potential investors pause. Fortune reports on some of Lehman’s issues with regard to market value and holdings:
The market values for most of Lehman’s mortgage-related assets, especially the commercial real estate paper, have been dropping steadily. In turn, this has fueled speculation of yet another quarter of writedowns for the firm, with estimates putting a likely charge anywhere from $2.8 billion to $4 billion. Over the past year, Lehman has taken some $6 billion in writedowns.
However, some are beginning to think that maybe LEH represents an opportunity. Korea Development Bank is serious about offering to buy a 25% stake in the company, and Tokyo Mitsubishi Bank is also mulling the idea of buying a rather large stake in Lehman Brothers.
All of this has been good news for Lehman. LEH stock has been languishing, thanks to heavy losses on mortgage backed securities and other instruments that have been hard hit by the credit market crisis. If there really is competition over who will help Lehman Brothers out of this mess (HSBC and a Chinese bank are also reported to be in contention), then it could mean that LEH makes a good buy now. After all, the price is low right now, but if someone — somewhere — provides the capital infusion needed to keep Lehman afloat, the stock price could see a good recovery.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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LEH, investments, mortgage backed securities
