Barron’s really helps the retail investor sort it out. In the August 13, 2007 issue, it recommends buying Bear Stearns (BSC) primarily because someone else is likely to buy the company. Two perspective buyers per Barron’s are Warren Buffett and China. Considering Buffett had fun at Solomon, and the Chinese government have watched Blackstone’s (BX) IPO falter, I’m not sure I understand the logic here. In any case, how would any buyer of BSC be able to accurately calculate the true book value of the company at this point?
Turn the page and there’s an article, “Don’t Buy the Brokers Yet” and BSC is on the list. (All of this after the July 30 issue where BSC was described as “the biggest bargain” and “could reach $150 a share if earnings hold”.) Lehman Brothers (LEH)* which Barron’s has tried to pump up in two recent issues: June 18 and July 23 (“It’s Still Time to Buy”), is also on the “Don’t Buy” list.
The most accurate statement emanating from the current issue is the cartoon of C.W. Barron on the front of the MarketWatch section: “Credit comes from the Latin root ‘to believe.’ And I don’t believe the credit problems are over.”
* See my June 18, 2007 post: Will Barron’s Like Lehman in August? which has more accurately predicted the brokers’ fates than Barron’s.