A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

Gaurav's Blog


Day: September 23, 2008

The Lehman Labyrinth was a Landmine that it’s CEO,Fuld stepped on and blasted

Lehman paid for it’s Ego and Arrogance….It had to Close because it consistently failed to Disclose

The Fall Guy has to be it’s CEO and Chairman,Richard Fuld….Poor Fellow…sold off 2.87 million Lehman shares on Wednedsay,September 17,2008 for just 20 cents/share realising US $ 639000…..just  a year ago these were worth US $ 169 Million ! …He yet holds another half a million shares….but these have zero trading value as trading has ceased….maybe some auction value !…but the thorn in the eye is that this guy has made US $ 490 million in the fourteen years with Lehman by selling Options and Grants 

It’s really ironic that Fuld was unable to see that Lehman was living in “Smokes and Mirrors” for Months when outsiders were crazily shorting the share

One Hedge Fund,Greenlight Capital walked away with US 3.1 Billion in gains because it’s Creator and Founder,David Einhorn kept on shorting Lehman from US $ 60 in November 2007…..he repeatedly challenged Fuld to disclose the real exposure to mortgage related bonds….In June 2008 Einhorn sarcastically commented on CNBC that Fuld had rasied US $ 6 billion…money he had earlier stated Lehman did not need…..to fund Losses that he had stated he did not have !

I have also read Fuld’s letter to Warren Buffett inviting him to Invest in Lehman in these difficult times….Not once in the letter is there any apology for the irresponsible behaviour of Lehman and the significant overleverage that made Risk Unmanageble and  led to the Losses…The Guy is begging Buffett but as an arrogant CEO,tempting him with an immediate 25% gain in share price once he committed…Pathetic really…all he should have done is said “Buffett, these are my numbers…Can you save us ?…..Buffett had rejected a similar Invitation months ago and did the same this time around too….Share a sad thought for those Investors who gave Lehman US $ 6 Billion a few months ago ! 

Fuld will realise now what he has really done!….over 25000 Employees have lost their job….US Taxpayers Monies in Billions of Dollars are being spend to clean up Lehman’s Mess…By exposing Lehman,Fuld has exposed himself to legal action….he’ll need every million to defend himself. 

Merill Lynch saw the writing on the wall and quietly accepted a US $ 50 billion bid from Bank of America…Morgan has just announced that Mitsubishi Fund will take a 20% stake in it…Goldman Sachs and Morgan will convert to Holding Companies from Investment Banks  read more

Where are we on this Zig Zag ?

Came across this very interesting Zig Zag Chart……I say there’s some more pain…so we should be moving towards panic on the downside….mark… the recovery will not be as pronounced….in that  a Sensex of 21000 that was touched in the first month in 2008 is now not even visible on the horizon on any recovery from despondency  

Reiterating the previous Blog….look for scavenger prices….lifeless prices….thats the point of Maximum Financial Opportunity….The Market as a whole yet has to fall towards such prices…though some scrips have had  such a pronounced fall that the lows they fell to could be viewed as scavenger prices….Sesa Goa dropped like a closed parachute inside days from ex bonus ex split levels of Rs 175 to lows of  Rs 99/100 four trading days ago as FIIs who held 23% of the equity began exiting to repatriate urgent liquidity to their sinking mothers back in USA …It’s bounced back to Rs 126 showing that India has some matured value Buyers who will not miss scavenger prices even if the overall sentiment is bleak and weak

So prepare your Stock Selection Lists and assess what should be the Scavenger Price range for each selection……this would be your entry point…this would vary from person to person based on risk profile and valuation assumptions…For Example IFCI is looking like a Vulture Pick to some at Rs 38/39….My Scavenger Price Range is Rs 25 to Rs 29….buying at distress price and not stress price will give maximum gains…and believe me distress time is coming up ahead    

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