Voltron says: If Lehman reports a profit, short every share you can get your hands on.
Bank in focus after reports it may announce results early, raise cash
By John Spence, MarketWatch
BOSTON (MarketWatch) -- Investors will be paying close attention to Lehman Brothers at the start of the week after reports the company may announce its second-quarter results ahead of schedule and unveil a plan to raise additional capital.
Lehman (LEH) is widely expected to post a quarterly loss -- its first as a public company -- as a result of exposure to troubled mortgages and other faltering assets. The company has faced lingering concerns over its capital position and leverage as investors remain vigilant for the type of problems that forced the near-collapse of Bear Stearns.
Estimates on the amount of capital Lehman may be compelled to raise have ranged as high as $6 billion, according to news reports late last week. Also, some Wall Street analysts said certain Lehman counterparties have grown increasingly wary of trading with the firm. See related story.
On Friday, a Lehman representative declined to confirm the release date of the bank's second-quarter earnings report, but the results had been originally expected to be issued the week of June 16. A Lehman spokesman couldn't immediately be reached on Sunday.
Lehman has already raised about $8 billion in capital this year and has been trying to reel in its leverage. The company last week denied reports that it had borrowed money from the U.S. Federal Reserve through the discount window.
The stock has lost about half its value so far this year. Shares of the broker finished down 4.6% at $32.29 Friday.
Lehman's plan to pre-release its quarterly financial statement was driven by pressure from investors who are short Lehman shares, including hedge fund manager David Einhorn at Greenlight Capital Re Ltd. (GLRE) , according to a report last week by the New York Post.
The report also said the capital injection would come through a rights offering.
The earnings announcement and capital-raising plans could come as early as Monday or Tuesday, the Financial Times reported, citing people briefed on the matter.
Lehman's purported difficulties come as U.K. banking giant Barclays (UK:BARC: news, chart, profile) (BCS) , which has also faced pressure over its capital position, is seeking to raise cash from overseas sovereign wealth funds, according to a Sunday Telegraph report. See related story.