Former Bear Stearns Chairman Sells All of His Stock: What Does He Know That We Don't?
In a somewhat shocking announcement Thursday afternoon, Bloomberg.com reported that, on March 25, 2008, James Cayne, former Chairman of Bear Stearns had sold his entire 5.66 million share stake in the company for $61 million ($10.84/share). The sale surprised many observers who expected competing bids for Bear Stearns. In fact, Cayne and Joseph Lewis, another major shareholder, had tried to drum up competing bids for Bear as late as last week.
The “get out while the getting is good” sale suggests that Cayne himself may have concerns about Bear’s underlying value. The Bear has been notoriously difficult to value because of its intricate involvement in a broad array of complex derivative arrangements, many of which are illiquid. In addition several of Bear’s core business segments have significant exposure to volatile market conditions. Since it would be logical to expect that Cayne would want to maximize the value of his huge holding in the Bear, apparently he concluded that $10.84/share was close to its maximum value.
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