(1888PressRelease)
September 13, 2007 - A British billionaire has acquired a seven per cent stake in troubled bank Bear Stearns.
Joe Lewis, a Tottenham Hotspur shareholder who made his money by trading in global currency markets, paid $860 million (£424 million) for the stake which he has built up over the last two months.
The disclosure has prompted analysts on Wall Street to question whether Mr Lewis has successfully identified the bottom of the market in the wake of the crisis in the subprime mortgage market, or if he has over-paid.
Chris Whalen, of Institutional Risk Analytics, believes that Mr Lewis has entered the market at the right time and that it is investment in banks which are trying to cover up the extent of their exposure to the subprime mortgage market crisis that should be avoided.
"What the investment shows is that Bear Stearns looks like good value at this level. Bear Stearns is a sound bank, I'm not worried about their future," Mr Whalen told the Times.
"The banks you should be worrying about are the ones who have still to 'fess up about their exposure to subprime. The banks who have owned up about their exposure and been forthright about it are going to be fine.
"The real problem is the lack of certainty in the market, the lack of hard data to do with the rest of the banks."
Shares in Bear Stearns, America's fifth-largest bank, have fallen by around 30 per cent this year in the wake of the bank's admission that two of its hedge funds had lost $1.5 billion collectively and that it would have to close them down.
However, a further indication as to the state of the market is that Goldman Sachs, Lehman Brothers and hedge funds including GLG Partners and Oaktree Capital are reportedly raising funds to invest in debt.
Further analysis could be supplied on the US subprime mortgage crisis by Aranca, an end-to-end provider of on-demand, custom investment, business and economic research.
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