Bear Stearns Explained

As I'm sure that most of you know Bear Stearns (BSC) recently had a tremendous amount of downward pressure from their high exposure to the mortgage loan market.

Now this is not a technical case as to why you should have invested in BSC when the offer came in at 2$ that weekend because all of the technicals were screwed... but there were many reasons as to why the stock price began to creep up on March 17th until the new offer was posted at 10$ a share on March 24th. Here is the reason:

At 4$ a share BSC's market cap (worth of a company) was 545m. Finally after snooping around for a while I found that the assets alone of the buildings of BSC was 605m (from AOL). Which is not even including any of the "Actual" cash that they may have because banks cash flow statements are very confusing since their investments are cash and can be leveraged which is why BSC says it has a book value of 80$ a share (which is obviously false).

So with just the assets of the company alone of 605m that has a price of $4.50 a share. So when it bottomed out on the 17th at 2.84$ this was an obvious buying opportunity for anyone that was smart enough to get in at that 1.20$ ish range of the bottom. Even if you got in at 4$ and then sold at the value of the PHYSICAL assets of the company at 4.50 that is still a 10%-ish swing in a day or 2. (Which is pretty much what you can get from a good mutual fund in a good year).

These are the types of values that you need to keep in mind and when something gets announced after hours like this do your homework, figure out what happened and if it is correct because even if that was the correct offer at 2$ that doesn't mean that someone else can't realize a fire-sale when they see it and outbid JP Morgan.