12 key dates in the demise of Bear Stearns

March 17, 2008


1: Dec 14, 2006
Bear Stearns posts record earnings, touting huge profit gains from then-booming businesses advising on mergers and arranging credit derivatives, distressed debt and leveraged finance deals.

Bear stock closes at $159.96. The average price target from Wall Street research analysts covering the stock is $166.24 according to Reuters Estimates.

2: Jan 12, 2007
Bear shares close at a record $171.51 on momentum from its strong earnings report the previous month. The average price target: $174.

3: May 24, 2007
Bear shares close at $147.55, a six-week low, after Goldman Sachs slashed its quarterly earnings target for its rival investment bank, citing concern about Bear’s heavy exposure to the mortgage securitization business. The average price target: $181.73.

4: June 14, 15 & 16, 2007
On June 14, Bear reports earnings declined for the first time in four quarters on weaker results from its mortgage securities business. On the 15th, the Wall Street Journal reports a hedge fund run by Bear has suffered big losses on soured subprime mortgage investments. (A second fund with similar troubles would soon emerge.) The next day, the 15th, the Journal reports that Merrill Lynch, a creditor to the fund, seized some of its assets. The stock closes at $150.09 on the 15th, a Friday. The average target price: $181.

5: July 17, 2007
As losses from subprime mortgages begin to begin to threaten credit markets around the world, Bear Stearns informs investors in its two struggling hedge funds that the funds have “very little value” remaining. Bear shares end the day at $139.91. The average target price: $178.23.

6: Aug 5, 2007
Warren Spector resigns under pressure as co-president and co-chief operating officer, having lost the confidence of long-time CEO James Cayne for his handling of the subprime mortgage crisis. The stock closes at $113.81 on Aug 6, a Monday. The average target price: $164.29.

7: Oct 5, 2007
Prosecutors launch a criminal probe into the collapse of the two Bear Stearns hedge funds. The stock closes at $131.58. The average target price $144.17.

8: Dec 20, 2007
Bear reports its first-ever quarterly loss, driven by $1.9 billion of bad debt write downs. It also says executives will not receive annual bonuses. Bear shares close at $91.42. The average target price: $121.67.

9: Jan 8, 2008
James Cayne is replaced as CEO by investment banker Alan Schwartz. The stock closes at $71.01. The average target price; $111.36.

10: March 12, 2008
Responding to market rumors of a cash crunch at the bank, Bear CEO Schwartz goes on CNBC television and assures viewers that the firm has ample liquidity. The stock closes at $61.58. The average target price: $98.87.

11: March 14, 2008
JPMorgan, backed by the Federal Reserve, provides an undisclosed amount of emergency financing to Bear Stearns. Bear says its liquidity position had deteriorated dramatically in the previous 24 hours. The stock plunges to close at $30.85. The average target price: $93.62.

12: March 16 & 17, 2008
JPMorgan agrees on March 16 to buy Bear for $236 million, or $2 a share, representing just over 1 percent of the firm’s value at its record high close just 14 months earlier. The deal essentially marks the end of Bear’s 85-year run as an independent securities firm. Bear shares end March 17, a Monday, at $4.81 on optimism another buyer may emerge. The average target price: $2.

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There was a period in may 2008 when bear sterns went down to $2 a share, and then up to $10. anyone choosing to do wild betting on that day probably made a lot of money. Of course after that it was a roller coaster as well. Then it seamed like a good bet to get some under priced banks, until more got churned under that is.

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[…] for $159, and one year later it was worth $2 a share. (No, those numbers aren’t made up.) See 12 key dates in the demise of Bear Stearns. If you receive $75 in a settlement, is it income? It […]

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