Blog Roll — More on Buying Bear Stearns
Bloggers at Stock Market Beat believe the story that Bear Stearns’s bond holders are buying the stock, but he suggests a more complex possibility — they’re playing in the options market as well. “Given that the bonds were trading at $700 per $1,000 face value on Friday, and are worth $1,000 when backed by JPMorgan, it is pretty simple math. For every $1,000 of bond exposure, you can pay $70 to vote in favor of a deal that is worth $300 to you,” they write. “WhatÂ’s more, since there was so much more debt than equity, only a small fraction of the bondholders need to make this bet to gain an overwhelming majority of the equity votes. Or, each bondholder could insure a smaller portion of their value.”
Meanwhile, Bess Levin of Dealbreaker notes that the biggest winner might be former co-president Warren Spector, who was jettisoned in August. “Following a change in the companyÂ’s deferred compensation plan in 2004, Spector apparently sold $382 million of his stock, and as of last March, only had a stake of about 0.06 percent, unlike Cayne, who owns about 5 percent of the company, and recently saw his munchies fund go from about $1 billion last year to $12 million today,” she writes.
Blogs We’re Reading:
