Lehman Brothers (LEH) keeps raising capital. They raised 6 billion dollars this weekend. The print price of the secondary offering was $28. Investors who bought this offering are down on their investment. These offerings have ratchet down protection. The raise prior to this one is offered the terms of the latest offering.
As they need more capital, capital will become harder to raise. Lehman is engaging in a dangerous game of negative progression. The usual outcome of any strategy involving negative progression is called Gambler's ruin. When all is said and done, the probability that LEH suffers a death by Gamblers ruin is very high. They should have learned from Bear Stearns. Obviously they have not. The likely outcome is that Lehman's chart will eventually resemble the chart of Bear Stearns.
Stay away from financials including Lehman.
Joel Stahl
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