Commentaries

Now raising intellectual capital

Trash is king as Lehman shares surge

August 28, 2009

It’s either a sign of sheer boredom on Wall Street, or an early celebration of the one-year anniversary of Lehman Brothers’ demise, but shares of the fallen invesment bank were red hot today.

The stock rose some 200%. Take that AIG.

For some inexplicable reason, shares of the bankrupt investment bank, which trade on the loosely regulated over-the-counter Pink Sheets, changed hands some 73 million times on Friday. That’s a lot of trading in a stock that’s been worthless for nearly 12 months.

Indeed, on a typical day, the average trading volume in Lehman shares is about 2.6 million. The last time Lehman’s stock came anywhere close to today’s trading volume was way back in October, about a month after the Wall Street firm filed for bankruptcy.

Then again, today’s trading surge boosted Lehman’s closing stock price to 15 cents. It had been sitting around 5 cents for months. Better yet, Lehman now has a respectable market cap of $103 million–not too shabby for a small-cap company on the Pink Sheets.

Of course, this trading in Lehman is just crazy. There’s not good explanation for it. Just as there is no good explanation for the big surge in shares of American International Group.

Maybe this is just a case of traders trading trash financials to score a quick profit because they can’t find anything else to trade.

Comments

‘For some inexplicable reason’, ask the otc market makers at Knight Securities.. sometype of technical short squeeze.

the market makers always win though

Posted by dvictr | Report as abusive
 

“Maybe”? “For some inexplicable reason”? How about the reason that when the bankrupcy results come in, they may find out their assets are worth more than thought? How about if their assets are not 90% toxic, but only 20% toxic?

Posted by some dude | Report as abusive
 

Lehman’s shares are going to recover very nicely as soon as they wade through all their assets…even Marsal has stated that they have still have 99% of assets to go through…Lehman was HUGE before they fell and if you think I’m wrong, look at WAMPQ, WAHUQ, WAMKQ, all Washington Mutual shares trading in the .80, $9, $20+ and rising fast…Truth is your article neglects the real money in companies that restructure and keep common shares intact…PGPDQ, CEMJQ, SSCCQ, all companies you wouyld be retired on right now if you would have dumped 10k when people though it was “trash”…..

Posted by kevin | Report as abusive
 

Oh please what is this article saying??
“For some inexplicable reason”, hey, the fact that you (the writer) doesn’t understand it doesn’t mean it’s inexplicable…

LEHMQ is gonna be $1.5 (and not precisely cents) very very shortly…

haha yeah yeah, follow these kinds of articles to be succesfull in finances…
Warmest regards,

Posted by Goldfinger | Report as abusive
 

not sure exactly what’s going on, and i don’t follow it, but i think the deadline for filing claims against the bankrupt lehman estate passed sometime in the past week. my guess is that someone has been watching this and guessed that there was a chance the equity would get paid something. i don’t know anything about it, but i’d go for the prefs first if they are all liquid. how have they been trading?

Posted by q | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •