Monday, January 7, 2008

Bear's Cayne Steps Down: Opportunity?

Bear Stearns (BSC) Chief Executive James Cayne is resigning under pressure from shareholders, with British billionaire Joe Lewis the largest shareholder and the stock down 53% in the last year, could a deal for the company be in the works?

A deal for the bank from another is doubtful ans the only ones capable at this point are JP Morgan (JPM) and Goldman (GS) and I just do not see either being the least bit interested. But, there is something interesting here that could happen. Bear is essentially a trading house as investment banking was only 20% of revenues last year.

Could a hedge fund, looking at going public such as a KKR or SAC come into play and pick up Bear on the cheap (it is valued at less than $9 billion). That $9 billion is before the next round of write downs that are surely due which will op off more vslue from the company. This would enable the hedge funds to do a quazi IPO like they have been talking about without the expense and drama doing one now would entail.

With his investment down over $100 million, Mr. Lewis might just be open to owning a piece f a hedge fund with KKR's a r SAC's track record...

Just a thought...
Disclosure: Long Goldman

Todd Sullivan's- ValuePlays

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