rally

Ready for 'write-ups' in the second quarter?

Thu, 15 May 2008 06:59:56 -0400

Breakingviews notes another reason to think that the worst of the credit crisis may have passed. Credit default swaps on collateralized debt obligations and leveraged loans have staged impressive rebounds. Prices have really rebounded. That raises the prospect of "write-ups" for the second quarter, which would certainly help offset expected weakness in other areas. Who'd have thought that just a few quarters ago. Still, there's no point getting too excited now. The article notes that the rebound has affected all securities; there are plenty of stinkers in plenty of portfolios. As well, the rebound may have been a bit of a dead-cat bounce, if you know what I mean. Still, there seem to plenty of distressed securities buyers out there. We'll see where this mini-rally leads.

For more:
- here's the Breakingviews article

Another round: Lehman Brothers vs. shorts

Thu, 03 Apr 2008 07:59:57 -0400

The Lehman Brothers bears took a bath when the market rallied on the news that the company had raised $4 billion to shore up its capital position. A lot of put buyers and short sellers were hit hard. Lehman Brothers now thinks the heaviest shorting came from hedge funds that illegally conspired to drive down its stock price. Lehman has forwarded information on the matter to the SEC. According to the Financial Times, executives believe a coordinated effort to attack its stock began on March 16, the day Bear's sale to JPMorgan was announced. Lehman's stock fell nearly 50 percent on that day. Short interest hit a record 43 million shares. A lot of those guys, subsequently, were forced to cover, which aided a huge rally. Such allegations will be hard to prove but there maybe some truth to them. Still, some say Lehman can't blame the shorts entirely.

For more:
- here's the Financial Times article

Related Articles:
Lehman doubters' short-sightedness backfires. Article
Private equity vs. the shorts. Article

Lehman doubters' short-sightedness backfires

Wed, 02 Apr 2008 07:59:58 -0400

Recall all the rumors about Bear Stearns right before its final implosion; they were pretty intense--so intense that the SEC is looking into whether they were fanned by traders with massive short positions. The shorts won that battle. While Lehman Brothers has been hit with similar rumors, the shorts, this time, took a beating, the New York Post notes. There was heavy put buying activity, but the announcement that it has raised $4 billion led to a big rally. By one estimate, the put buyers lost $300 million. Ouch! This may not be the last round in the bulls vs. bears war over specific firms, but another bear Stearns-like home run does not seem likely.

For more:
- here's the Post article

Related Articles:
Private equity vs. the shorts. Article
Lehman Brothers still faces antsy markets. Article