Take Out

On the heals of yesterdays post TakeDown you might think that the bears got their snouts smacked, they did not, in fact they are licking their chops waiting to take Lehman out. When Bear Stearns was 130 and falling a rumor came out that Warren Buffet was buying in. Of course he wasn't, but the stock managed a short covering rally and we all know what has happened since. The same Warren Buffet saga appeared when Country Wide traded at 17, the shares rallied as the shorts covered and Country Wide has since imploded.

Yesterdays rally was as phony as any since the two involving Buffet last summer and for Lehman's bears it only sweetened the feast. What the bears did yesterday was to cover their shorts the way you would take a late night snack from the refrigerator and are poised to short again at a much higher price. You can see clearly how desperate the government and the Street elite are to keep this market from unraveling. But unraveling it is, in historic fashion right in front of our eyes and along with it Lehman brothers. And you can bet I am not the only one laughing my as# off at the games the Street plays.

Lehman (LEH) is announcing a $3 billion convertible preferred to 'institutional investors'. In other words, retail will never get their hands on the paper and it is likely a way for LEH to pay back some clients with a cheap deal.

If everything is so rosy, and just a few months back, LEH announced it was going to buy 100,000,000 shares at around $65 a share (stock it never bought) then why would it dilute itself at $37?

Because it has to.

Bonn appetite!