Ladenburg Thalmann

Richard Bove sticking to his guns on Lehman Brothers

Jim Kim — Mon, 01 Sep 2008 07:24:21 -0400

Ladenburg Thalmann analyst Richard Bove is sticking to his guns on Lehman Brothers. He made headlines--again--not too long ago for his buy recommendation, which was driven by his belief that a hostile bidder will emerge. He still believes that is true. He says the potential bidders are private equity firms, banks and investment banking firms. Does he know something we don't? Because it is not clear at all who specifically will want to bid for the troubled investment bank. Most have their own issues right now. The fact that the stock trades at about half of book value is an indicator of what Mr. Market thinks of the theory. But who knows? Bove has been right before. We may get a surprise deal, though it may be more like a take-under than a takeover.

For more:
- here's a MarketWatch article

Is a takeover of Lehman Brothers reasonable?

Jim Kim — Mon, 25 Aug 2008 13:23:03 -0400

The ubiquitous Richard Bove, analyst at Ladenburg Thalmann, made headlines yet again when he recommended that his clients buy Lehman Brothers because the "stage was set" for a hostile bid. But not everyone buys that, notes Financial News Online. The big question is, who would buy it? Few big banks are positioned to make a hostile bid. They have their own issues and do not need the distraction. I could see some firms bidding for asset management properties, but that would leave the rest of the company to the vultures. So while we may not see a takeover attempt, we may see a white knight move. There may be a company that rides to the rescue in a negotiated deal that will keep a few parts of Lehman alive, while shutting down others, like most of the mortgage-related machinery. The terms will be interesting. The market currently values the non-asset management portions of the business at about zero.

For more:
- here's a Financial News Online article
- KDB warned against buying Lehman Brothers. Article

Lehman Brothers: How bad will it get?

Jim Kim — Fri, 22 Aug 2008 07:38:15 -0400

Lehman Brothers may not be facing a Bear Stearns-like insta-implosion, but it's staring at a long, drawn out demise that may prove just as painful. At this point, we have to question its ability to survive as a standalone bank. It's clear that raising capital will not be easy. For whatever reason, the talks with Asian investors broke down. It doesn't look like selling assets is going to work out, given the credit rating and earnings implications. Losses will mount. Writeoffs will continue. Perhaps Richard Bove, of Ladenburg Thalmann, has it right: he's telling clients to buy the stock because the stage is set for a hostile takeover. Is that why George Soros is loading up? (See next item.) But that begs the question: Who would want the entire bank? They might want the asset management properties, but the rest of the store may not be worth a lot. Debt underwriting--still Lehman's big unit--has tanked, so the options here are really limited. This is water torture, but then again maybe Lehman CEO Richard Fuld has something up his sleeve.

For more:
- here's a New York Times article
- here's a Forbes article

What good is the universal bank model?

Jim Kim — Mon, 18 Aug 2008 18:36:48 -0400

Citigroup gets all the attention, but the universal banking model was embraced by other banks over the past decade or so, though not to the same degree. The idea of course was to create a set of integrated services that offered customers one-stop financial shopping. In so doing, another benefit would emerge: Business diversification would make banks better able to withstand various shocks. The likes of HSBC, UBS and JPMorgan Chase all bought into that. The AP notes that the current crisis seems to be putting the lie to such thinking. Is JPMorgan Chase better off for its 2004 purchase of Bank One? Ladenburg Thalmann's Richard Bove doesn't think so. Also, the internal breakup of UBS strikes some as admission that the universalist model has yielded bitter fruit. Clearly, the subprime reach was incredibly extensive, reaching across consumer and institutional markets.

For more:
- here's the AP article

Related Article:
Is the current banking model obsolete?

Merrill Lynch to slash dividend?

Jim Kim — Thu, 14 Aug 2008 20:35:58 -0400

It's no secret that banks are constrained as they try to raise capital these days. Shareholders seem to have borne the brunt of these efforts, to say the least, and there's got to be a limit as to how much abuse they can take. But it looks like dividends may have to be cut by more banks. At Lehman Brothers, the top dogs could eliminate its 17-cent dividend and still not raise a whole lot. But at Merrill Lynch, such a move may be inevitable; it could save nearly $3 billion a year if it eliminated its dividend. Fortune notes that analysts Dick Bove of Ladenburg Thalmann and Brad Hintz of Sanford C. Bernstein have predicted a dividend cut at Merrill Lynch. Obviously, capital remains an issue. We'll see how this plays out.

For more:
- here's the Fortune article

Richard Bove is in his prime

Jim Kim — Sun, 03 Aug 2008 22:30:03 -0400

We've noted that analyst Richard Bove is a "reporters' best friend" sort of analyst. At 67, he's been covering banks for 26 years and he's definitely in his prime--he's gotten better with age. "Bove has gained a certain reputation as one of the few bank analysts to predict the blow-up in the housing market and subsequent problems at many banks. He is also one of the few whose advice, if heeded, would have made money for investors over the past year." Few analysts these days are publicizing "who's next" lists of failing banks. He's tough on executives--unafraid of CEOs at Morgan Stanley, Citigroup and others. At Ladenburg Thalmann, he's got what he thinks is a fine perch from which to criticize. He's negative still on investment banks but thinks some commercial banks have turned the corner.

For more:
- here's the Times profile

Richard Bove sued for defamation

Jim Kim — Tue, 22 Jul 2008 07:35:33 -0400

Not too long ago, Ladenburg Thalmann bank analyst Richard Bove made headlines when he put out a list of the banks most likely to fail. There was a day when analyst research was basically limited to clients. These days, however, people pretty much expect it to be posted on the web. Sure enough, someone gave the report to Dealbreaker. BankAtlantic, No. 10 on Bove's list, was not too happy. It sued him for defamation, reports the New York Times. The bank's view, of course, is that such commentary, especially when given a public airing, is irresponsible in that it could prompt a run on a bank that would make the bearish view almost self-fulfilling. Recall Sen. Charles Schumer's public comments about IndyMac. This may be a hard case legally for the bank, but it has made its point. Now, if it were to fail, that would complicate matters.

For more:
- here's the New York Times article

Bove switches calls on top banks

Fri, 23 May 2008 06:59:58 -0400

Richard Bove, of Ladenburg Thalmann, is one of those go-to guys for financial reporters. He gets a lot of ink, for good reason, most would say. He's making news again: He just changed his call on Goldman Sachs, Lehman Brothers, and Merrill Lynch to sell. Sell! He's apparently leaving Morgan Stanley off the sell list for now. The problem, as noted by Fortune, is that that the price of oil now threatens to push rates higher. That hurts the banks with highly leveraged balance sheets. He also believes that banks have suffered some bad news from hedges. This is a bit of a change for Bove. In March, he pronounced the credit crunch over. Earlier this month, he made news again for his bullish outlook. But circumstances have changed.

For more:
- here's the Fortune item

ALSO NOTED: Citigroup may sell Japanese consumer finance unit; Morgan Stanley closes infrastructure fund; and much more...

Tue, 13 May 2008 06:59:50 -0400

Company News:
> Morgan Stanley closes infrastructure fund. Article
> More on HSBC earnings. Article
> Citigroup may sell Japanese consumer finance unit. Article
> Soros on Bear Stearns. Video
> Evercore posts a 1Q loss. Article
> Ladenburg Thalmann posts loss. Article
> Bank of America to launch NASCAR commercial. Article
> Pandit flexes muscles. Article

Industry News:
> Analyst: REITs overvalued. Article
> Pearlstine to join Bloomberg. Article

Regulatory News:
> SEC looks at Wachovia and auction rate securities. Article
> Feds close a bank in Arkansas. Article

And Finally... 92-year old shareholder declares war on exec pay. Article

ALSO NOTED: Fitch puts Countrywide on evolving credit watch; Bank of America ready to integrate LaSalle; and much more...

Tue, 06 May 2008 06:59:50 -0400

Company News:
> Interactive Brokers Group to sell shares in Dutch auction. Article
> Fitch puts Countrywide on evolving credit watch. Article
> Ladenburg Thalmann buys Punk, Ziegel & Co. Article
> First Marblehead to slash jobs, costs. Article
> More on Citigroup's Old Lane funds redemptions. Article
> Bank of America ready to integrate LaSalle. Article
> Eddie Lampert faces his shareholders. Article

Industry News:
> Asia pools $80 billion to address liquidity issues. Article

Regulatory News:
> Feds create subprime crime task force. Article
> SEC lowers the boom on Safevest commodities fund. Article

And Finally... Five ways to protect your job in tough times. Article