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Super,
Thanks for the reply.
My son and I were actually discussing this today.
Realizing that Lewis owned the shares which were around $150 when he
bought them, I was thinking why not short the stock and buy puts as
well. If indeed that is what he did, I'm figuring he might have made
quite a bit.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, superfragalist <no_reply@xxx>
wrote:
>
> Preston, it's a simple problem. One has to have a billion to lose a
> billion, so no I wouldn't have lost a billion on Bear Stearns.
>
> When I saw Bear Stearns stock price dropping, I asked a few people I
> know if they would lend me a few hundred million to buy some, but
> their money was all tied up in mortgages, so I was spared a terrible
> painful lesson in diversification.
>
> Super
>
>
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, pumrysh <no_reply@> wrote:
> >
> > All,
> >
> > Below is a story reported by the Orlando Sentinel concerning the
loss
> > of money suffered by Joe Lewis when Bear Sternes bellied up.
> >
> > Several Questions:
> >
> > 1. How would you have handled the situation?
> >
> > 2. Would you have lost money?
> >
> >
> > Preston
> >
> >
> >
> > OrlandoSentinel.com
> > Lake Nona 'Medical City' will survive Lewis' Bear Stearns loss of
> > more than $1B
> > Jerry W. Jackson
> > Sentinel Staff Writer
> > March 18, 2008
> > Tavistock Group and its high-profile "medical city" in southeast
> > Orlando won't be hurt by owner Joe Lewis' loss of more than $1
> > billion in the meltdown of investment-banking giant Bear Stearns,
a
> > spokesman for the British billionaire and his Windermere-based
> > company said Monday.
> >
> > Lewis, ranked by Forbes magazine as the 368th-wealthiest person
in
> > the world, had gambled as much as a third of his net worth during
the
> > past year on a turnaround for Bear Stearns Cos., paying an
average of
> > about $107 a share for 11 million shares, according to papers
filed
> > with federal regulators.
> >
> > But in a stunning downfall for the storied brokerage, the Federal
> > Reserve helped engineer a takeover Sunday by another U.S.
investment-
> > banking giant, JPMorgan Chase & Co., for about $2 a share and the
> > assumption of debt.
> >
> > "It happened very quickly. The investment essentially went to
zero,"
> > said Doug McMahon, a managing director for the privately held
> > Tavistock, which Lewis uses to invest some of his earnings as a
> > currency trader and investor.
> >
> > Lewis, who lives part time in Isleworth, the ultra-exclusive
> > residential development in southwest Orange County, will not have
to
> > sell any of Tavistock's assets, McMahon said, because no debt was
> > involved in his Bear Stearns holdings.
> >
> > "Certainly, it's a big deal," McMahon said of the loss. "But he
can
> > absorb the hit, and it doesn't change the business here one way
or
> > another." Forbes recently put Lewis' net worth at $3 billion,
though
> > McMahon said that figure "underestimates his portfolio," and The
> > Sunday Times of London earlier this month reported that Lewis was
> > worth about $5.6 billion.
> >
> > "Our actions will be reassuring," McMahon said of Tavistock. The
> > company will continue working, he said, on the infrastructure for
its
> > planned medical campus in Lake Nona, a Lewis-owned development in
the
> > southeast corner of Orlando. Buildings are already under
construction
> > there for the University of Central Florida College of Medicine
and
> > the Burnham Institute for Medical Research.
> >
> > McMahon said Tavistock, which recently announced plans to build a
> > 100,000-square-foot "wet lab" in Lake Nona in hopes of attracting
> > startup biotech companies to the medical campus, is going forward
> > with design work on that project. The company also just began
> > building a joint-venture golf resort on New Providence in the
> > Bahamas, in partnership with golfers Tiger Woods and Ernie Els.
> >
> > Lewis, 71, who was born in an apartment above a pub in London's
East
> > End, has been widely known as a "contrarian" investor for years,
> > gambling on big returns as others are fleeing an investment. Long
a
> > resident of the Bahamas, he began buying up Central Florida
property
> > in the late 1970s, acquiring both Isleworth and Lake Nona when
they
> > were financially ailing luxury developments.
> >
> > He began snapping up shares in Bear Stearns last year just as the
> > breakdown of the nation's subprime-mortgage market was beginning
to
> > spread to other credit instruments across the country and around
the
> > world. The company's shares were trading at well over $100 a
share
> > when Lewis began accumulating his stake through a Tavistock
> > affiliate, but Bear Stearns had helped create the market for
complex
> > financial derivatives, and as that market unraveled, the
company's
> > stock price fell.
> >
> > Lewis kept buying as the share price fell, and at one point he
was
> > the company's single-largest shareholder. He ranked second, with
more
> > than 9 percent of the outstanding shares, when Bear Stearns'
fortunes
> > took a turn for the worse last week and the company could no
longer
> > raise capital on its own.
> >
> > McMahon, who oversees business investment and marketing for
> > Tavistock, said Lewis never sold his shares as the credit crisis
> > deepened. "It was intended as a long-term investment," he said,
and
> > as a bad stock bet is likely to go down as one of the biggest in
> > history by an individual.
> >
> > New York-based JPMorgan, the third-largest financial-services
company
> > in the U.S., agreed to pay about $260 million for Bear -- a
fraction
> > of its $13.6 billion market value as of Nov. 30, the end of its
> > previous fiscal year.
> >
> > David Currie, a professor of economics at Rollins College's
graduate
> > school of business in Winter Park, said the Fed's action in
helping
> > to arrange the deal was a high-stakes gamble in itself, designed
to
> > maintain liquidity in the financial markets and calm the nerves
of
> > investors and bankers worldwide.
> >
> > "The key is confidence," Currie said. "Once people lose
confidence,
> > they try to liquidate as fast as they can."
> >
> > Currie said he, too, was surprised by the rapid collapse of Bear
> > Stearns, an 85-year-old financial institution that had a stock-
market
> > capitalization of $3.4 billion, or $30 a share, as recently as
> > Friday, when the Fed and JPMorgan announced a rescue effort. But
he
> > said he was not surprised that the nation's central bank had
crafted
> > a plan to help Bear avoid bankruptcy.
> >
> > Bear Stearns stock was still trading at more than $4 a share
Monday,
> > an indication that at least some investors were betting that the
> > offer of about $2 a share from JPMorgan will somehow be bettered.
By
> > the end of the day Monday, a federal lawsuit seeking class-action
> > status had been filed in New York on behalf of investors who had
> > purchased Bear Stearns shares between Dec. 14, 2006, and March
14.
> > The complaint accuses the company of making "materially false and
> > misleading statements" about its financial condition, causing the
> > stock to trade at "artificially inflated prices," which peaked at
> > $159.36 a share in April.
> >
>
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