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Prosecutors Probing Bear Funds

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PROSECUTORS PROBING BEAR FUNDS:

The headline: In late breaking news Dylan Ratigan says Bear Stearns is facing a criminal probe over some of its hedge funds.

According to CNBC's Charlie Gasparino, the US Attorney's Office in Brooklyn has begun examining the circumstances behind the implosion of the 2 subprime hedge funds. No subpoenas have been issued yet.

VIDEO0:0000:00
Word on the Street

Tim Seymour tells the Fast Money panel that he isn’t surprised. He says it’s all about accountability.

> Read more about the Bear Stearns Probe

A WHALE OF A DAY:

The headline: Heavy Wall Street Whale Action Thursday With Ackman Buying Sears, Whitworth Pressing Sprint Nextel. Plus, in late breaking news, The Wall Street Journal reports that Sprint (S) has launched a hunt for a CEO successor. The company is hoping to have someone in place by December.

Ralph Whitworth, Activist Investor
- Runs Relational Investors, LCC
- Says he has "lost confidence" in Sprint Nextel CEO Gary Forsee
- Owns 1.9% of Sprint Nextel outstanding shares

Pete Najarian doesn’t think there’s a quick fix for Sprint. However, he sees the late news as a move in the right direction.

Jeff Macke thinks Sprints a buy.

Bill Ackman, Activist Investor
- Runs Pershing Square Capital Mgmt. L.P.
- Disclosed 5 Million share stake in Sears Holding (SHLD) Thursday 

Karen Finerman explains Ackman and Eddie Lampert have a history of not getting along so well. She expects to see an ego clash.

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OIL BACK ABOVE $81:

The headline: Crude Climbs 2% Above $81 On Unexpected Decline In Supplies

Also gold rebounded as the dollar fell once again says Ratigan.

Jeff Macke thinks the commodities space Thursday was completely dollar driven. He’s hoping for weakness in the jobs number so the Fed continues to ease rates.

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AFTER HOURS ACTION: RESEARCH IN MOTION:

The headline: Volatile After Hours As Strong Earnings Fail To Impress;

Research In Motion (RIMM) profits more than doubled to $288M, matching estimates, explains Ratigan. In addition, the company reached the 10 million subscribers mark.

In a Fast Money Charles Schwab poll we asked if you were buying RIMM ahead of earnings. Here's what you said.

YES:    60%  
NO:      40% 

Pete Najarian likes RIMM.

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MERRILL PINCH:

The headline: Merrill Lynch (MER) Ousts 2 Top Fixed-Income Executives As Credit-Related Losses Loom..

Since the end of August….

Goldman Sachs (GS) + 28%,
Lehman (LEH) + 15%
Merrill Lynch (MER) + 1.5%,

Tim Seymour says MER has underperformed (as you can see from the chart above) and heads will likely roll. However, he’s a buyer of MER on relative value.

Karen Finerman reminds the panel that GS downgraded MER the other day.

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FAST MONEY WORLD: RATES:

The headline:  European Central Bank, Bank Of England Hold Rates Steady As U.S. Traders Clamor For More Cuts

Billionaire investor Christopher Flowers has expressed interest in buying Britain’s Northern Rock Bank explains Dylan Ratigan. The stock surged 12% on the speculation.

Karen Finerman says although Flowers might be interested in Northern Rock, she recommends other investors wait.

Tim Seymour agrees.

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ANOTHER VACATION DAY SPOILED:

The headline:  Hong Kong Index Drops Nearly 2%, Ruining Another Day Of China Vacation; Hang Seng Index Sees 4.4% 2-Day Slide, Worst In 7 Weeks;

Pete Najarian explains the iShares FTSE/Xinhua China 25 Index (FXI) traded up Thursday and it's nearly at unchanged for the week.

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PORT O' CALL:

The headline: Port Owner DP World To Raise $3.5B In 2nd-Biggest Middle East IPO Ever

Tim Seymour feels this is a company to watch.

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SECTOR TRADE:  ALTERNATIVE ENERGY, MAINSTREAM GAINS:

The headline: Alternative Energy Firm Energy Conversion Devices(ENER) Surges 5% Thursday

Pete Najarian says upside call buying suggests to him Energy Conversion (ENER) is headed higher.

OPTIONS ACTION: SURGICAL STRYKE:

The headline: Pete Seeing Unusual Options Activity In Medical Device Company Stryker (SYK)

Pete Najarian says options action suggests to him the stock is heading higher.

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CRASH DIET:

The headline: NutriSystem (NTRI) Plummets 33% After Slashing Outlook, Reporting Drop In New Customers

Jeff Macke reminds the panel that Herb Greenberg never liked this stock.

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Trader disclosure: On Oct 4, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (ATI); Najarian Owns (ENER), (RIMM): Finerman Owns (COV), (GS),: Finerman's Firm And Finerman Own (HD): Finerman's Firm Owns (JNJ), (PSS), (KSS), (BEAS), (BWS), (COP), (NYX), (NMX), (VMSI): Finerman's Firm Owns S&P 500 Puts: Finerman's Firm Owns Russell 2000 Puts; Seygem Asset Management Owns (AA), (VIP), (GLD): GE Is The Parent Company Of CNBC