Tuesday, March 18, 2008

Enron revisited: Looking back at Bear Stearns

Kinda' feels like Enron all over again, doesn't it? What has happened in recent days at Bear Stearns is nothing short of shocking. I cannot imagine the pain and anger being felt by employees who are seeing their 401k plans reduced to almost nothing (if they had a big chunk of their plans in Bear Stearns stock). Hard-working people who thought they were well on the road to a comfortable retirement will now have to start all over again. This is a company whose stock price traded at nearly $90/share in the last 30 days and over $150/share in the past 12 months. See their stock chart (iMiners) over the past 30 days: http://www.iminers.com/pressroom.php?page=chrt.php&symbol=BSC Note on the chart the news releases that BSC issued. iMiners charting plots every company issued news release on the chart so investors can gain deeper context and insight into how company events may impact the stock price. Very interesting that on March 10th they issued a press release titled "Bear Stearns Denies Liquidity Rumors": http://www.iminers.com/render.php?eid=105914669&symbol=BSC&whichmodule=pressroom. Alan Schwartz, President and CEO of The Bear Stearns Companies Inc., said, "Bear Stearns' balance sheet, liquidity and capital remain strong." Here is a view of their 12 month stock chart (by iMiners): http://www.iminers.com/pressroom.php?varwhichpage=1y&symbol=BSC&page=chrt.php On this chart you can put your mouse over any time period to see how many news releases BSC issued, and then click on a timeframe to zoom in and see that specific 30 day window and all the news issued during that timeframe.

So the media, employees, and shareholders DID have reason to believe there were problems, but the company issued a press release with a quote from the CEO reassuring there were no liquidity issues, and several days later the company stock tanks 50% and the company is sold at a firesale price over the weekend.

No comments: