Magazine article American Banker

Some Shy Away from Bear Stearns, Awaiting Lower Price

Magazine article American Banker

Some Shy Away from Bear Stearns, Awaiting Lower Price

Article excerpt

NEW YORK -- With brokerage industry stocks rallying, securities analysts agree that Bear, Stearns & Co. chose the right time to bring itself public. Despite the timing, some experts said they would shy away from the stock until its market price dropped below its initial level of $21.50.

The issue hovered slightly above its initial asking price during its first day and a half of trading. In composite trading on the New York Stock Exchange on Wednesday, Bear Stearns closed at $22, unchanged from the day before. It trades under the symbol BSC.

Some analysts said the price has been buoyed by a temporary rally in brokerage industry stocks, prompted by the anticipation of lower interest rates.

"It's not a good buy at 22," said Perrin H. Long Jr., brokerage industry analyst for Lipper Analytical Services in New York.

"I'll wait for it to drop to 15. In a slower market, Bear will settle at a lower level," he said.

Bear Stearns began trading at about two times its book value -- a company's assets minus its liabilities. And at that level, Mr. Long said he thought the firm was overvalued compared with the stock prices of other highly regarded firms such as First Boston Corp. that specialize in capital markets rather than retail operations.

Managing its own initial public offering, the 62-year-old firm on Tuesday offered 10 million shares in order to raise $215 million, bringing its total equity capital to $565 million. Because much of the amount of those proceeds will be devoted to paying off a big tax bill, Bear Stearns expects to raise an additional $100 million by selling debt securities in the future. …

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