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Hi Cameron,
You're right 10% is a lot and wouldn't be easy to trade.
Joe was a principal shareholder and I'm not sure he would have had to
report as an insider. That would have been to his advantage if he had
planned on short selling to recoup his purchase price or assume a
larger shareholder position.
Reckon we'll never really know for sure. Mind boggling though to
think about that much money.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, Cameron Reid <cwr_74@xxx>
wrote:
>
> Hi Preston,
>
> I'm pretty sure I would have lost money as well.
>
> I believe that the greatest error in judgment on Joe's part was to
purchase 10% of the firm. In almost any case this is too big of a
position to trade out of. At this point, they only way you can
practice risk management is to get a seat on the board and try to
engage management on the point you feel are important.
>
> Can you imagine the bid you'd get as an insider trying to sell 10%
of Bear over the last two weeks? Can you imagine what this offer
would communicate to Bear's clients and consequently do to the
stock. I think this is what kept Joe in the trade. It most likely
would have kept me there as well.
>
> Depending on when Joe was buying, if he had of purchase a basket of
the Goldman, Merrill, Morgan Stanley, Lehman and Bear - he'd probably
make money.
>
> Cheers,
>
> Cameron
>
>
> To: equismetastock@xxx: no_reply@xxx: Wed, 19 Mar 2008 22:08:50
+0000Subject: [EquisMetaStock Group] Lewis' Loss
>
>
>
>
> 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?PrestonOrlandoSentinel.comLake
Nona 'Medical City' will survive Lewis' Bear Stearns loss of more
than $1BJerry W. JacksonSentinel Staff WriterMarch 18, 2008Tavistock
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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