I had to blink. It couldn’t be real. But there it was -- BSC, the ticker symbol for Bear Stearns. Back and open for business?!
Actually, no -- Bear isn’t trading again. Instead, we have proof that the market, or at least Deutsche Bank, has a very short memory.
BSC stands for -- and I’m not making this up -- the Ben Graham Small Cap Value Elements ETN (exchange-traded note).
It is named after the late, great Ben Graham, the father of value investing. His most noteworthy fan is Warren Buffett.
I never thought I’d see BSC, value investing, and Warren Buffett in the same sentence again. Deutsche Bank has launched the ETN; and Greg Newton wrote on Seeking Alpha, “Who says the Germans don’t have a sense of humor?”
But BSC? I checked around. Why not give the Ben Graham Small Cap Value Elements ETN (what a mouthful) the ticker symbol BGS? No, that’s taken by B&G Foods. BCV? Taken also, by Bancroft Fund. BSC just happens to be available.
Graham is perhaps most famous for writing “The Intelligent Investor,” which Buffett has reportedly called the best book ever written on investing. Dow Jones Newswires reports Graham once wrote, “An investment operation is one which upon thorough analysis promises safety of principal and an adequate return… Operations not meeting these requirements are speculative."
Well, I hope the new BSC is a better "investment operation" than the old BSC. Adding to the irony, BSC is an ETN, which, unlike an ETF (exchange-traded fund), is a debt instrument that carries credit risk if an issuer can’t pay. BSC...credit risk...heh, heh...
But BSC isn’t alone. Deutsche Bank is issuing a total of three ETNs which track the Benjamin Graham Intelligent Value Indexes. All are based on Graham’s philosophy to find businesses “with strong, liquid balance sheets that trade at a discount to the implied intrinsic value.”
Maybe there are similarities after all. Bear Stearns wasn’t especially strong or liquid, but many feel JP Morgan got BSC at a “discount to the implied intrinsic value.”
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