Updating Lehman Sell Call

2 weeks ago, we reiterated a previous Sell on Lehman Brothers (LEH). That worked out pretty well. Even with the Dow up 160 points today (after falling 1,000 points in only 14 trading sessions) Lehman cannot catch a bid and remains under pressure.

The LEH news is the management shuffle — CFO, COO out. I suspect more heads will roll, including Fuld’s. The bottom line is the Short sellers and bloggers were right, management was full of crap, and my friend Charlie Gasparino was –w ell, watch the video below.

Let’s go over the two calls from two weeks ago on CIT Group (CIT) and Lehman (LEH): 

CIT is a break-even — you lost nothing by avoiding the stock. The Lehman Sell call was a jumbo winner:

If you avoided the stock, well, good for you! You stayed out of trouble;

If you sold it, Congrats! You just saved yourself a 30+% whackage.

And if you shorted it or bought put options, well, you should be covering half here, and letting the rest ride. Then you should visit this portion of my Amazon wish list. (Pick out something nice !)

~~~

Here’s the breaking news about the first heads rolling at Lehman (more to follow).

Sometime ago, my pal Charlie Gasparino quoted a CEO about how "the shorts were full of bullshit" on air. (were is that link?) or that "the shorts are getting desperate" or "the shorts are full of it."
 

As it turns out, not so much.

Charlie — who is buying me a beer next week — is now on CNBC, breaking the news, discussing Lehman’s CFO and COO, bloggers, shorts, and more. Charlie admits these guys were liars, and that they sandbagged everyone.

click for derogatory video
Gasparino

Previously:
Financial Sector: Beware LEH, CIT  http://bigpicture.typepad.com/comments/2008/06/financial-secto.html
(back up post)

Dirty Tricks at Lehman?   
http://bigpicture.typepad.com/comments/2008/06/dirty-tricks-at.html

Lehman posts Jumbo $3B Loss; To Raise $6B http://bigpicture.typepad.com/comments/2008/06/lehman-posts-ju.html

Chart(s) of the Day: Bear Stearns & Lehman Bros    http://bigpicture.typepad.com/comments/2008/03/charts-of-the-d.html

What's been said:

Discussions found on the web:
  1. Ed H commented on Jun 12

    That wishlist is fabulous. LOL! I have got to get one of those watches.

  2. michael schumacher commented on Jun 12

    I can’t help but think that was CG’s position the whole time. He still is a ‘tool….

    How anyone could look past the fact that about 90% of LEH’s positions (or “assets”) are in those wonderful securities is missing the entire boat.

    I think LEH’s whole game was to “try” and establish a floor with the deal for stock @28, pile in retail and then “hope” the floor was in.

    BTW how many of these people who bought that news will be holding it over the weekend??

    Ciao
    MS

  3. scorpio commented on Jun 12

    love the Faber comment about the $6 B buyers trying to DK the trade which settles today. someone inside LEH syndicate would be doing the world a favor to release that list of evildoers and simpletons.

  4. michael schumacher commented on Jun 12

    BR-

    actually it was last week the original call was made. Two weeks ago would have been MUCH better…..

    Ciao
    MS

  5. ECONOMISTA NON GRATA commented on Jun 12

    Those whacky bloggers and shorts…. I tell ya… Why I otta….

    We need to hire someone do do something about them….

    Econolicious

  6. doug commented on Jun 12

    “sandbagged”? did you mean to say “teabagged” instead?

  7. Bill commented on Jun 12

    Did you say to go short? I thought you just said to get the hello out, which turned out to be a great call.

    Gasparino called you out a few weeks back, saying you said to short, rather rudely – which you cleared up by saying you only said to sell.

    Either way, Gasparino looks like a putz since January 2008 – never met a false rumor he didnt like spreading

    ~~~

    BR: Our quant system only has 3 ratings: Buy, Neutral and Sell.

    This was a Sell, and we put a $20 price target. We did not short this (tho institutional clients may have). SAame with Bear (BSC) — We had a Sell, but no shorts on.

    AIG, FNM, MNST were published and position shorts.

  8. ECONOMISTA NON GRATA commented on Jun 12

    Barry:

    Slightly off topic, just slightly.

    Take a look at this link…. I mean really….!

    http://finance.yahoo.com/q/ao?s=LEH

    To be fair, I just found out that the C analyst is living in my pantry. However I do have wi-fi….

    Econolicious

  9. Jay commented on Jun 12

    How many days before LEH has its Bear Stearns moment?

  10. shoeless commented on Jun 12

    Gas-bagrino more or less said that while he doesn’t condone lying he understands why the CFO lied last week about a buyer for some of LEH’s toxic crap. WTF is wrong with these people? CG says, “Lehman was fighting for their lives”. Big effin deal. We condone lying to the marketplace when it suits us? Give me a break.

    Barry, you shouldn’t accept a beer or anything else from this turd.

  11. John F commented on Jun 12

    Wait, I thought this site never made investment recommendations, and anyone who would make an investment decision based on a blog posting was a rank fool. Can’t have it both ways. Good call though, nonetheless.

    ~~~

    BR: The Sell ratings come from Fusion IQ (my day job).

  12. pwr commented on Jun 12

    Gasparino’s pathetic. I am sick and tired of idiots like him talking about things of which he has no idea, being proven incorrect, and then making excuses for himself.

    And the problem with guys like Gasparino is not only that they’re wrong, it’s also that they make a fine living for themselves, while being completely wrong. Guys like these are not simple noise pollution. Take Cramer, for example. My friend almost spent $400 of his hard earned money on a service sold by Cramer, in which he would give my friend stock “tips.” Fortunately, my friend did not spend a dime when I showed him the numerous stupid calls that Cramer made over the years. But are there not people out there who have spent their hard earned money on Cramer’s service, even though he has proven that he is incompetent, over and over again?

    It’s simply astounding that guys like Gasparino and Cramer, who have no idea what they’re talking about, and who have been proven to be incorrect repeatedly over the years, make fine living for themselves and laugh all the way to the bank, while bloggers who turn out to be completely correct get nothing.

    Nice work, Barry.

    ~~~

    BR: I wouldn’t say nothing . . . the blog throws off plenty of psychic as well as monetary compensation. The publicity has generated additional assets under management. Besides, its a labor of love.

    So I got THAT going for me, which is nice…

  13. Donny commented on Jun 12

    Charlie Ask:

    “Put up Dick Fuld vs. Barry Ritholtz, who do you believe?”

    LoL

    Oh BR … you ruthless blogger you. You have contributed to the destruction of Lehman.

    Lehman is getting exactly what they deserve after taking senseless risk, year after year.

  14. v commented on Jun 12

    Hey BR, has your buddy Gasbagarino apologized to YS at Naked Capitalism yet? It doesn’t have to be public. But he does need to apologize.

  15. tyaresun commented on Jun 12

    BR,

    Was the $20 target for technical reasons or you think someone might buy LEH at that price?

  16. michael schumacher commented on Jun 12

    accept the beer….then slowly pour it over his head. People like him make it harder for people like you to do business…at least being above board.

    Sort of a “i’m going to soak you as you did so many others last week”

    With “friends” like him……..

    He knew EXACTLY what he was doing….why do you suppose he gets all the rumors?

    Ciao
    MS

  17. Gaspo-editorial commented on Jun 12

    Gasporino has been the ultimate spin-meister and editorialist in his reporting of events throughout the credit crisis.

    Between mono lines and investment banks, he has frequently been a Short Seller of observations and facts, and a “double-long ETF” of rumors and his own spin on the rumors.

    It’s always about “how long I have known this CEO on Wall Street” “he’s a fighter”. So much hot air and time wasted when all you have to do is look at a chart and ask yourself whether the trend is your friend?

  18. stuart commented on Jun 12

    Does anyone here really believe that these folks are/were the only folks lying. It is a collusion of lying and we all bloody well know it. Just have any of them explain why it is OK to book to income downgrades of their own debt (in that case the market is right), yet keep on the balance sheet any asset downgrade, as a level 3 asset (in that case the market is wrong). A tad too selective in my books. They’re all lying and covering their asses desperately hoping to buy time.

  19. JRH commented on Jun 12

    Barry, still a sell on CIT technically after today’s action? (+6% on above avg vol)

    TIA,
    JRH

  20. Francois commented on Jun 12

    “Hey BR, has your buddy Gasbagarino apologized to YS at Naked Capitalism yet? It doesn’t have to be public. But he does need to apologize.”

    I’ll second that. Gasparino threathen litigation against Yves for “inaccuracies in reporting”.

    Riiiiiiight!

  21. Francois commented on Jun 12

    “BR: Our quant system only has 3 ratings: Buy, Neutral and Sell.”

    How about a 4th one?

    SWM? As is Short Without Mercy?

  22. dukeb commented on Jun 12

    “Hey BR, has your buddy Gasbagarino apologized to YS at Naked Capitalism yet? It doesn’t have to be public. But he does need to apologize.”

    I’ll third that. Gasbag is a Dbag…and boy, does he love the sound of his own voice. (What bar are you going to for the beer? I’d like to be sure I’m far, far away from that rendezvous.) I read Yves’ blog daily, and it’s one of the most refreshing of them all not just for the detailed opinions, but for its seeming lack of proximity to CNBC ilk.

  23. lunatic fringe commented on Jun 12

    The man has got a lot of nerve. From the handling of the monolines to the reporting on Lehman, it’s very clear that he is either complicit in the fraud or he’s been getting played. Those seem to be the only choices: either he’s a crook or he’s an idiot.

    I’ll repeat what I said before – With friends like that, who needs enemies…

  24. dcm commented on Jun 12

    i don’t get the sense that LEH is “over”. at this point, einhorn’s issue, the marks, has not been addressed. the same clowns are still running the place, too. at >20x leverage with their hands in a lot of dangerous cookie jars, it’s hard to say the coast is clear.

  25. pablo commented on Jun 13

    barry

    How bout total conscienceness ? got that going . lol

  26. Chief Tomahawk commented on Jun 13

    re: Amazon wish list

    With all those watches you’re going to give “Flavor Flav”, aka the clock guy, a run for his money.

    But where is this on the list?

    http://en.wikipedia.org/wiki/Bugatti_Veyron

    [Scroll down to “Fuel Consumption”; you’ll need a benefactor just for the gas….]

  27. John commented on Jun 13

    The Gasper is full of it. I didn’t catch this yesterday but what a load of bs from himself. Fuld surely can’t hang in there. Callan doesn’t surprise me at all, she’s outright lied in a situation where it was very easy to check out what she said and made preposterous claims that proved incorrect in days. I wonder just how good her grasp of the numbers really was since apparently she didn’t actually have an accounting background and when numbers get put on your desk in a big and complex business like this you have to know which questions to ask. She won’t be the last to go down because she parrotted info. And as for all the people magazine adulation of the past few weeks. Bizarre.

Read this next.

Posted Under