Joseph Lewis, one of the world’s richest men, has bought more shares in Bear Stearns (BSC), and now owns more than 9.5% of the company, according to Reuters. The questions is, is he smarter than almost everyone else? Shares of BSC have dropped from over $172 to $89 this year. The prevailing wisdom is obviously that the investment bank will not recover from its write-offs any time soon.
For Mr. Lewis to be right, the markets would have to come to view Bear Stearns more like they do Lehman (LEH). Its shares are only off 15% to 45% for BSC. That would bring Bear Stearns’ stock price closer to $150.
For the time bring, Mr. Lewis does not look terribly astute. But, patience may end up being his friend. The shares in the company made a big move from 1991 to 1992 after Wall St. had a rough patch. Lewis must hope history will repeat itself.
Douglas A. McIntyre