"Two large hedge funds managed by investment bank and brokerage Bear Stearns are close to being shut down as their complex mortgage-related bets have soured, the Wall Street Journal reported."
"The Journal said the two funds held over 20 bln of investments just a few weeks ago, mostly tied to risky securities linked to so-called subprime mortgages."
Twenty Billion in a matter of weeks...I'm sure the bulls will continue to look the other way; there will always be a tidbit of good news to blindly focus on. But this newest revelation is only a stepping stone on the way to more major problems. Just a few days earlier, I found this article which outlined a trend of rising delinquencies, particularly among ARMs. Here's the most disturbing part of the article (conveniently tucked down at the bottom):"More than 30 subprime lenders, including New Century, have gone bankrupt this year."
And I also found this:
"New Century is among more than 50 lenders that have halted operations, gone bankrupt or sought buyers since the start of 2006, according to Bloomberg data."
As if it weren't common sense, I recommend selling Bear Stearns (BSC). The stock is currently trading at $145.01, a loss of about one percent since the start of trading. To not see more of a precipitous drop is a case of blind bullishness.
Updated June 20, 2007 1:25 PM:
Bear Stearns closed the trading day at $143.20.
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