According to David Einhorn, president of Greenlight Capital, Lehman Brothers has not written down enough bad mortgages and he wants them to raise large amounts of capital which he thinks will be badly needed.
The remarks were the latest volley between the short seller and the 4th largest investment bank. It's worth noting that Greenlight has sold Lehman's shares short, a position that profits if the bank's shares drop.
Einhorn's scathing comments along with general suspicions about balance sheets sent the Financial Select Sector SPDR (XLF) down 7% this week. Should you buy the dip or stay away?
There was very unusual put options activity in Lehman on Friday, reveals Jon Najarian. That suggests the stock could go lower.
Proceed cautiously, adds Tim Seymour. .