“I do not view this as a Bear Stearns problem, but a systemic one.”
“This could force a wide variety of other holders of subprime mortgage securities and CDOs to meaningfully revalue their holdings. That would cause significant declines in book values and stock prices.”
– Richard Bove, Financials Analyst, Punk Ziegel in a research note from Wednesday
Punk Ziegel Financials analyst Richard Bove yesterday (Wednesday) downgraded all 5 of the largest investment banks (Goldman, Bear, Lehman, Merrill, Morgan) from “hold” to “sell” in response to the revelation that the Bear Stearns hedge funds involved with suprime mortgage backed CDOs were essentially worthless.
He also downgraded three of the largest commerical banks (B of A, Citigroup, JP Morgan) from “buy” to “hold”.
That’s a pretty bold move and his report is getting alot of attention on Wall Street. I certainly agree with him and have been writing about the same thing recently. Worth paying attention to as the market rallies again today.