Thursday, December 27, 2007

Moishe, I Know You're Enjoying All the Recent Bottom Feeding

Joseph Lewis Becomes Largest Bear Stearns Shareholder (Update2)

By Yalman Onaran

Dec. 26 (Bloomberg) -- Billionaire investor Joseph Lewis raised his stake in Bear Stearns Cos. for the second time this month while shares of the fifth-biggest U.S. securities firm declined.

The 70-year-old high-school dropout first bought a 7 percent stake in September and increased it to 8 percent earlier this month. He now owns 9.6 percent, according to a regulatory filing today. That makes him the New York-based company's largest shareholder, according to data compiled by Bloomberg, ahead of James Barrow, who oversees $50 billion as the president of Barrow Hanley Mewhinney & Strauss in Dallas.

Lewis has spent more than $1 billion accumulating his stake in Bear Stearns, whose value has tumbled on concern the collapse of the U.S. subprime mortgage market would erode profits. After Lewis's original purchases sparked speculation the firm might be for sale, people close to the trader said in September he was amassing the stake for investment purposes only ...

Barrow said on Dec. 7 that he trusts the firm's management and expects the share price to recover. Chief Executive Officer James ``Jimmy'' Cayne, whose 4.9 percent stake makes him the fifth-largest holder, is forgoing a bonus for the year after delivering the first quarterly loss in the firm's history.

Bear Stearns rose 49 cents to $89.29 at 4:30 p.m. in New York Stock Exchange composite trading. The shares have dropped about 10 percent this month and 45 percent this year.

Exercised Options

Investment funds Lewis controls paid as much as $110 for the shares this month, when the market price hasn't exceeded $105.75. He accumulated most of the shares when trading counterparties exercised options to sell him the stock at a preset price, according to the funds' regulatory filing. Lewis's funds also bought shares at $89 and sold some at $93, the filing shows.

Born in an apartment above a pub in London's East End, Lewis dropped out of school at 15 to become a waiter in his father's catering company. He expanded the business into a chain of eateries and opened tourist souvenir shops in Geneva, London and Rome. He got into currency trading as a means of investing receipts from his pubs and shops.

Two Bear Stearns hedge funds that bet on mortgage-linked securities failed in July, wiping out $1.6 billion of investor capital. Lewis is a customer of the Bear Stearns unit that provides brokerage services to wealthy individuals and pension plans, two people with knowledge of the matter said in September, when he first disclosed his purchases.

Bear Stearns said in October that China's government- controlled Citic Securities Co. paid $1 billion for a 6 percent stake. The firm invested the same amount in the Chinese investment bank.

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