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Trash is king as Lehman shares surge
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.
AIG lunacy
American International Group is a $50 stock. Yeah. Sure. But that’s what the market says it is today so it must be.
Shares of AIG are soaring today in part because the insurer’s new CEO Robert Benmosche tells a Reuters reporter that he doesn’t intend to conduct a firesale of the company’s divisions. He also says he’s been seeking guidance from former AIG CEO Hank Greenberg–the former Wall Street titan who just doesn’t know when to go away.
This is a great scoop for my Reuters colleague Adam Tanner. But come on. In my book, a CEO who jets off for a vacation to the Adriatic coast to a massive villa just days after taking over AIG doesn’t have a lot of credibility. So nice of Benmosche to take time out from his Croatian siesta to field phone calls from a reporter and reportedly wine and dine Greenberg.
At middday the stock was up nearly $11. Nearly 92 million shares have been traded already–more than four times the normal trading volume.
And it’s nearly doubled since AIG conducted a 1 for 20 reverse stock split in July. Shares have risen 71% since Benmosche took over on Aug. 10. Over the past two weeks, it’s been quite common for more than 100 million shares to change hands each day.
But does that “news” coming out of AIG really justify an nearly 30% pop in the stock on higher than normal volume? (There is some speculation of Greenberg putting together a bid to buyout AIG, but it is too ludicrous to repeat.)
What’s going on with AIG is more than just short covering, or mere speculation. It was easier to speculate in AIG when it was down in single digits–not at these levels.
RE: 10:07 comment
That should have been $100 BILLION + interest.
I still have a hard time making myself realize the actual numbers. I mean, we’re talking Trillion$ in deficits for the next few years.
Chestnut paraphrase but: A few hundred billion here, a few hundred billion there, after a while it adds up to real money!
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The Wall
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?