Greenlight expects more Lehman write-downs
Lehman Brothers Holdings Corp, largely unscathed by the mortgage meltdown this year, faces losses well beyond what the market is expecting, activist hedge fund manager David Einhorn told Reuters on Monday.
Einhorn, president of $5.5 billion Greenlight Capital Inc, noted Lehman has not recorded significant mortgage losses this year despite its standing as one of the biggest underwriters and traders of mortgages. He spoke at the Reuters Investment Outlook 2008 Summit in New York. But the New York money manager is shorting Lehman’s stock, which means he will profit if the shares decline.
Einhorn argues that because of the kinds of assets on Lehman’s balance sheet, the No. 4 US investment bank ought to have more write-downs when reporting Q4 results this week. „My view of Lehman has been that they’ve sort of suggested that they don’t have problems,” Einhorn said. „But when you look at their balance sheet, their mortgage assets, not just counting Level 3, are over $80 billion against only a $17 billion intangible capital base. That’s before their other exposures, suggesting that there may be problems there,” he said.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.