Share |

Thursday, March 20, 2008

Bear is Gone

Bear Sterns Sold for $2 per share! When the surprising news came out earlier this week the global markets were in panic as if it was the end of the world. While the worried investors rushed to sell other investment banks such as Lehman Brothers(LEH), the smart buyers snatch up shares of high profile investment banks trading at multi-year low. Lehman Brothers which trade as low as $20.25 the day after the Bear Sterns news came out came back to $46 per share the next day - a 100% swing.

Although you probably missed the 100% gain, this is still a perfect time to buy these brand name investment banks while they are still trading off the multi-year low. So here they are - the top investment banks in terms of market cap:
  • Goldman Sachs Group Inc. (GS): With market cap of $71 billion, the top investment bank is trading at around two year low with P/E of only 7.26, one of the lowest among the group. The company itself is hardly scratched by the subprime wow and is currently buying back shares.
  • Morgan Stanley (MS): the $55 billion investment bank was trading at 5 year low and almost 50% off its 52 weeks high. The company reported strong earning which beat forecast earlier this week. The stock is trading at Price/Book of 1.52.
  • Merrill Lynch (MER): the nation's third larget investment bank was also trading at 5 year low and 50% off its 52 weeks high. The company was actually selling shares in the latest quarter while institutions were buying.
  • Lehman Brothers Holdings Inc. (LEH): after the Bear Sterns fall out many people thought Lehman Brothers could be the next to fall. Panic selling send the price to the level last seen in 2000 which then triggered bargain buying. And when the investment bank reported better than expected earning a little after, the stock makes a 40% jump, the largest of the company's history. Now trading at $48 the stock is still 40% off 52 weeks high and is also at an attactive P/E of 6.7.