Lehman: The Week from Hell

Shares of Lehman have dropped over 75% in the last week! This is simply shocking and it leaves the market in a complete mess. Charlie Gasparino reported that Lehman is shopping itself to the street and 3 players have emerged lead by Bank of America along with Barclays and HSBC. I think LEH has gotten unfairly hit on their stock price. If it weren't for the wonderful precedent set forth by Bear Stearns, this stock would be trading at $7-8 easily. Now to be fair, they did lose $3.9B in the 3Q. Right now seems like a great chance for someone to get a great company at a discount. The asset management division is extremely valuable and the investment bank has done well in the past. The only problem is the balance sheet which is full of distressed mortgage related assets. Hopefully this won't discourage buyers. Many on the street were hoping that the Fed would guarantee a back drop for potential losses on Lehman as it did for Bear Stearns when JP Morgan acquired it, but no guarantee is on the table which has drawn out the takeover talks. If there was a back drop this would have already happened. They say that things will be done by Sunday and that people at the Treasury are in on the talks. The sooner this is figured out the better because this could be a disaster for the market.