Opinions

Paul Larson Lehman Brothers Holdings LEH-N DON'T BUY Aug 22, 2008

Not a stock for investors. Strictly for gamblers. In a position of duress at the moment. Thin slice of equity sitting on a very large trading book. This is endemic across the entire investment bank sector.

Paul Larson

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$14.410

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TRADE

Question was why the big jump? Stated their finances where in order, and showed financial statements which reassured the investors. Thinks they will survive, and the market was just correcting.

COMMENT

Has just recently done a $4 billion financing and basically has staved off the debt. Announced earnings well above analysts’ expectations.

PAST TOP PICK

(A Top Pick May 2/07. Down 42%.) Still has a model price of $75.31. That's a 72% positive differential. He would trade this now as opposed to Buy and Hold. Be cautious with this group.

DON'T BUY

Never been a big fan of investment banks because earnings are so volatile. Even at these valuations, he is not sure how much faith you can put into their books. What will the economic outlook be next year when deals are slowing?

SELL

Inside the financial group the investment banks are the ones that are faced with the most difficulty. This company has had significant problems with their balance sheet. Thinks it is very likely that the company will get bought or folded into another firm.

DON'T BUY

US Housing Market: There is nothing more out of favour right now than financials, consumers and housing stocks. You should only invest in businesses that you personally understand and it is his view that nobody can really understand the business of an investment bank right now.

DON'T BUY

Korea Development Bank is rumoured to be taking a major stake in this bank but it would not be unusual. Stock is not doing well as many deals of this type involved very expensive preferred shares.

DON'T BUY

Going into bankruptcy. Currently trading at $.22, but only because the Shorts are covering. Shares are actually worth nothing.

COMMENT

(Best call ever made.) He had made a comment (in March/07?) that this company had the biggest book in terms of mortgages that he felt would be a challenge.

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Paul Larson Lehman Brothers Holdings LEH-N DON'T BUY Aug 22, 2008

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