What are the risks of shorting Bear at $5?

Quote from Cutten:

Yes I know, but the other poster (and 3 or 4 others who clearly read the website in question then regurgitated it on ET without accrediting the story, trying to pass it off as their own insight) said it was up because bond holders were buying to take control of the equity. Leaving aside the point that this means the equity *is worth* the price they are willing to pay, it clearly means that his proposition that the equity is worth only $2 or $0 is nonsense.
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I am not making any claims; I didn't even look at any website :).

I am not claiming that this is what is going on, BUT if it is I think it a genius move.

Very simple; The Bond Holders (seems to be in the 100's of billions) can buy a protective option on the deal getting done buy buying up enough equity. THEY DON'T CARE what the equity is going to be worth. Their VWAP could be 7.00 and they would lose; at most (if they bought say 30+% of float) be about 75 Million. They only see -75 million vs. -10's of billions.

The JPM deal is a godsend to BSC bondholders; GODSEND.
 
Quote from flytiger:

talk to me, what did I hear? I need that.
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i wasnt paying attention , but i did hear something about the FED and them being pissed off about shorting...more or less what you posted...
 
Margin Call during the speculative period. In the long run when the deal is officially confirmed the $2 is even expensive for JPM.

Quote from himself:

What are the risks of shorting Bear at $5?
What are the probability that these risks occur?
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Quote from flytiger:

11:40 BSC Bear Stearns: Additional Market Chatter (7.51 +2.70) -Update-

Additional chatter in BSC that bondholders are buying stock up to these levels so they can own enough equity to vote the deal through. $150b in face bonds vs $600mm in market cap in order to save billions in bond value. Recall 9% holder Joe Lewis threatening to vote down the deal.

Briefing Trader. Here. I'll give them a free plug
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http://dailybriefing.blogs.fortune....stearns-stock-is-in-orbit/?source=yahoo_quote

"The shareholders at Bear Stearns that received bonuses this year also do not want the bankrutpcy filing to occur as all of those bonuses could be recoverable as preference payment made within 90 days of the bankruptcy filing."

Does anyone know if this is correct?
 
First of all, fuck you all. Second, what website. This sounds like some real interesting stuff, but there is too much secrecy. Just post the fucking website, and what did the Fed say to Leisman.

Kin out.
 
Quote from The Kin:

First of all, fuck you all. Second, what website. This sounds like some real interesting stuff, but there is too much secrecy. Just post the fucking website, and what did the Fed say to Leisman.

Kin out.
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I'm looking, I'm looking. Do you think it's fun listening to these assholes twice in a day???? Jeeze.

and thatnk you for concerning yourself w/my libido.
 
since there was a class action lawsuit filed you will have to wait a long time to find out whether this transaction will hold up. As I am an attorney, I can tell you that it is black letter law that you need shareholder approval for a sale of all of the assets of the corporation. Notwithstanding, the courts may screw the shareholders due to the emergency situation. That is politics. The worst part of it, is that you wont know how this will be resolved for a long time. Therefore, do you really want to get into a trade that potentially could get unwound 4 years later? Shorting it puts you into a possible big liability down the road. I would pass. Arn';t there other better opportunities out there?
 
Quote from RAY:

I am not making any claims; I didn't even look at any website :).

I am not claiming that this is what is going on, BUT if it is I think it a genius move.

Very simple; The Bond Holders (seems to be in the 100's of billions) can buy a protective option on the deal getting done buy buying up enough equity. THEY DON'T CARE what the equity is going to be worth. Their VWAP could be 7.00 and they would lose; at most (if they bought say 30+% of float) be about 75 Million. They only see -75 million vs. -10's of billions.

The JPM deal is a godsend to BSC bondholders; GODSEND.
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You are looking purely at the demand side and not the supply.

Without the possibility of a second bidder, every other stockholder would sell all the stock they own at $2.01, since the alternatives are i) bankruptcy at $0 per share ii) JPM bid at $2

The stock trading at $6-8 shows that a large amount of stock is being held and NOT sold for $2. Thus, a large number of shareholders think the stock is worth >$2. The only way it's worth >$2 is if either BSC survives, or a deal goes through at > $2.

In other words, the stock trading at $6-8 is implying the JPM deal will not go through in its current form or price.

Capisce? If you believe your own analysis, then short the hell out of it, it's free money. Lots of people did that yesterday, against my advice, and are now suffering a horrific loss instead of a huge windfall.
 
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