Saturday, August 29, 2009

Lehman Brothers (LEHMQ.PK) Up 200% Friday

Thanks to a reader for alerting me on this action Friday - the shell known as bankrupt Lehman Brothers (LEHMQ.PK) which now trades on the pink sheets rallied a solid 200% Friday. And why not - fundamentals no longer matter; even having a functioning business is just an afterthought.

As long as you have a shell that one high frequency trading firm can trade with another (or if you are real clever, I assume the same HFT firm can work in the dark pools and trade among themselves to create "demand" - not that this would ever happen because its illegal) - and lo and behold you can attrack other HAL9000s and the retail trader in.

What is inside that shell is really a moot point. The key is generating volume and earning rebates for each trade since you are adding liquidity - the cheaper the better (more shares = more rebates). Boo yah. Via Reuters:
  • It’s either a sign of sheer boredom on Wall Street, or an early celebration of the one-year anniversary of Lehman Brothers’ demise, but shares of the fallen investment bank were red hot today. The stock rose some 200%. Take that AIG.
  • For some inexplicable reason, shares of the bankrupt investment bank, which trade on the loosely regulated over-the-counter Pink Sheets, changed hands some 73 million times on Friday. That’s a lot of trading in a stock that’s been worthless for nearly 12 months. Indeed, on a typical day, the average trading volume in Lehman shares is about 2.6 million.
  • Then again, today’s trading surge boosted Lehman’s closing stock price to 15 cents. It had been sitting around 5 cents for months. Better yet, Lehman now has a respectable market cap of $103 million–not too shabby for a small-cap company on the Pink Sheets.
  • Of course, this trading in Lehman is just crazy. There’s not good explanation for it. Just as there is no good explanation for the big surge in shares of American International Group.

After watching Lehman I have decided to take the website public, under symbol FMMF - I believe I too deserve a market capitalization of $100M. I have 1 employee named Mark. I'd tell you some more of the fundamentals - but really it's a moot point. I just need a few HFT firms to take notice and start trading FMMF shares so we can draw in some retail daytraders and then it all self reinforces from there - we can all win here. I also have a llama farm I'd like to take public - symbol: LLAMA. I have another firm I want to take public, it does nothing in particular but I figure should be worth $50M since by doing nothing it is not losing money - symbol: FARCE.

The US stock market ... now akin to a scratch off ticket at your local liquor store.

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