Morgan Bags The Bear

Well, Eliot Spitzer’s resignation was just in time. Can you imagine what he would have said about this?

As of December 31, 2007, the New York State Teacher’s Retirement System owned 493,007 shares of Bear Stearns stock at a cost basis of $24,736,363.42 or $50.1745 per share. The year end value was $43,507,867.75 or $88.25 per share.

As of March 31 2007, the New York State and Local Retirement System owned 453,385 shares of Bear Stearns stock at a cost of $34,443,043 or $75.97 and a valuation at that date of $68,850,650 or $145.24

JP Morgan has just announced that they are going to buy Bear Stearns at $2 per share. Bear Stearns stock closed at $30 on Friday and at $57 on Thursday. Which means JP Morgan is not paying a premium to market. They are paying a 93% discount to market.

This means that the New York teachers and public employees invested $59 million in Bear Stearns and their investment is now worth $1.9MM, a loss of $57 million. If you look at their opportunity cost, the New York pension plans could have sold in June 2007 before reality hit mortgage market valuations at $151 per share. From that point of view, they have lost $149 per share, or $141 million

Master Link:

To identify mortgage and other holdings by your state retirement system and calculate the losses on Bear Stearns, here is a master link to state systems.

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