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Lehman Brothers shares have been on a wild ride as the investors debate whether the brokerage is going to be able to avoid the fate suffered by Bear Stearns.
In recent days, Lehman [LEH
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] has take steps to sell off some of its riskier assets and eliminate its proprietary trading. There also have been reports that the company is looking overseas for a strategic partner.
However, news that investment manager Loomis Sayles has been buying Lehman Brothers debt over the past several days--and a decision by Merrill Lynch [MER
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]to upgrade Lehman shares to buy--sparked a rally in Lehman shares.
CNBC asked the experts for their insight on the situation.
Gartman: Lehman Down, Not Out
"They protest too much. They keep telling us they don’t need capital – we know they need capital. It's just a matter of time, and where they go and get it…There's a lot of difference between this and Bear Stearns. Lehman’s not going out. They’re going down, however. The market thinks they need capital, everybody’s pressing upon them as a matter of psychology. Callan's done a good job. She's been out in front trying to explain where she stands, where we are. She probably needs to be doing more of that…I’ll be honest, I'm short all the bank stocks, because I think Lehman's in trouble, and it's not going to end for a while.”
Dennis Gartman, The Gartman Letter Founder
Fearing the Financials
"I think what keeps some investors awake at night is not just so much the bad news that’s currently priced in to current valuations in some of these stocks, but what may come next. Specifically, as regards Lehman…there’s a little concern out there regarding their exposure to commercial mortgages and commercial real estate markets, and that seems to be another shoe that has yet to drop."
John Brady, MF Global
Lehman vs. Short-Sellers
"My message basically to investors is don’t let this recent headline dissuade you from great values, generally, in financials. But I don’t think that Lehman is ultimately going to bring it all down. I see this ultimately as a spat basically between some very high profile short-sellers and people who are looking at the Lehman balance sheet and a potential downgrade.”
David Dietze, Point View Financial Services
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