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Strategies & Market Trends : Befriend the Trend Trading

SPY 665.67

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Nov 17 4:00 PM EST

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From: Dr. Stoxx	6/22/2007 10:24:53 AM
	of 39683

10:17 BSC Bear Stearns: Bailing out troubled hedge fund not the best use of stockholder money - Punk Ziegel (143.90 -1.91) -Update- Punk Ziegel notes that the press is reporting that BSC is lending $3.2 bln to its troubled hedge funds so that these funds will be able to pay back their creditors without more forced sales of assets. The terms of these loans are not known. However, firm says it is unlikely that the interest on the loans will be 11.2% or firm's estimate of BSC's return on equity. The investor in BSC stock is faced with the fact that the co may be lending money at below the rate it earns on capital into an entity where there is no good way to determinate value of its assets. Firm says it is also important to understand that $3.2 bln, if this is the right number, is 24.8% of BSC common equity. In sum, this is no small bet. Firm says this is a big amount of capital to be used in contradiction to the co's core operating philosophy.

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