Sep 16 2008
Lehman investors feel the heat
In times as recent as last week, the shares of Lehman Brothers ( one of the largest investment banking entity) nosedived almost 77% to reach levels which posted its biggest ever loss in its 158 year investment history. In wake of Lehman’s acquisition by another firm leading to its loss of independent identity the list of potential losers is huge. Topping the list are the employees of Lehman Brothers. The last count of these employees’s stood at a mammoth figure of 25K. 30% of the companies stocks are owned by its own staff members who now have a sad story to share. The recent turmoil in Lehman has resulted in a severe shrinkage of wealth of its staff members and the loss is being pegged at $15 billion of the total net worth of shares owned by its staff members.
Now this loss of personal wealth is further aggravated by the prospect of them losing their jobs as well. The news is equally grim for its horde of other shareholders. Anticipating a rebound in the economy in the near future propelled many of Lehman’s big investors to double their stakes. Amongst the list of its famous shareholders suffering huge losses now is Lehman’s number one share holder Alliance Brenstein LP hailing from New York who increased its stake by a huge 43% this year to reach 65.7 million shares. Even seasoned hedge fund managers of the likes of George Soros have not been spared from bearing the brunt. George doubled the size of his firm’s stake in Lehman Brothers to reach 9 million in the 3 month period ending 30th June. The damage does not end here and goes on to take a more vicious turn. Standing on the brink of suffering huge losses are the privately negotiated derivative contracts in tune of almost $44 billion signed by customers with Lehman who now only has $28 billion with him to offer in return.
But one’s misery is often the source of another’s joy. Travelling on same lines here are the other investment firms and individuals who hope to draw out maximum benefit from Lehman’s messy situation. The revenue of almost $59 billion posted by Lehman Brother’s last year will be up for grabs by these competitors with Morgan Stanley, Goldman Sachs and Merrill Lynch taking in the lion’s share. Also up for grabs will be the best parts of Lehman and will be eyed constantly by major investors or group of investors in wait for acquiring it at throw away prices.