Lehman Brothers Holdings Inc. (NYSE: LEH) is trying real hard to convince its Gucci-clad workforce not to abandon ship.

According to CNBC, employees will receive 20% of last year's bonus in stock that vests over three years. "Lehman's decision to issue additional stock to employees is being interpreted by some in the market as a sign that the Lehman is not planning to sell itself for a below-market price," writes CNBC ON-Air Editor Charlie Gasparino.

Hmm. Didn't the same conventional wisdom believe that Bear Stearns was too big to fail and that the end of the write-downs at Wall Street banks was near? So, pardon me if I am a little skeptical.

As Fortune magazine notes, Lehman, like other Wall Street banks, got itself into trouble by making scores of bad real estate investments.

"Because it prided itself on real estate expertise - it helped popularize real estate-backed securities in the early 1970s - and investment prowess, Lehman risked far bigger proportions of its own capital doing deals than its major competitors did," the magazine notes. Little wonder that the stock is down more than 65% this year.

Sorting out through this mess will take years. Any Lehman employees who were smart enough to get hired probably know a bad deal when they see it. This well-timed leak to CNBC is part of Lehman's efforts to avoid becoming the next Bear Stearns.

For now, the ploy is working. Shares of the New York-based investment bank are trading up on the news -- Lehman shares closed up 6.68%. Over the long run, though, investors and Lehman employees will see through the smokescreen.

I try not to do posts solely for the purpose of linking to someone else's great work but this item fro DealBreaker is probably the funniest thing I've read since Bear Stearns' insistence that its liquidity was fine: an article in the latest issue of Vanity Fair cites unnamed sources stating that a few well-known hedge funds plotted the company's demise -- and then laughed about it over a celebratory breakfast.

Bess Levin rips into the conspiracy theories with the post Who Killed Bear Stearns And Then Laughed About It At Denny's? We're Gonna Go With NO ONE:

Let's just say they did spread the rumors, which I don't believe they did (and, as an aside: if a company can be brought down by the corporate equivalent of 7th grade girls passing notes in class, perhaps it doesn't deserve to existence anyway). There is no way in hell this meal took place. Ken Griffin and Steve Cohen are not stupid enough to go chest bump over egg McMuffins with the rotting corpse of Bear Stearns at their table (that kind of genius is -- or was -- reserved for the upper echelons of BSC management).

Exactly.

Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees.

Many of them were the stocks we might have looked to in the past for stability, so you can be sure I put forward my five candidates with a little trepidation, but forward I go anyway. First a little review is in order.

Citigroup Inc. (NYSE: C) dropped from around $53 per share last year to around $30 in January and we can buy it today for around $17. Even at that price Goldman Sachs (NYSE: GS) has downgraded it to a sell and thinks there is more bad news to come. Citigroup was the largest bank in the world. Not any more.

General Motors (NYSE: GM) was the largest car maker in the world. That was before the stock tumbled from $43 to its current $11 range. A crushing blow to long time investors hoping that someone in the company could stop the ship from sinking.

Graphic novels are generally targeted toward a market the could best be described as anime freaks: junior high and high school kids who shop at Hot Topic, listen to bad music, and read graphic novels.

For reasons that aren't immediately clear, Portfolio decided to make the collapse of Bear Stearns Co. Inc. (NYSE: BSC) into a graphic novel, focusing on the days leading up to the fire-sale to the Fed-back JPMorgan Chase & Co. (NYSE: JPM). It's a neat idea but, by focusing exclusively on the company's last days, the comic portrays Bear's collapse as a run on the bank caused by malicious and unfounded rumors. The reality is that Bear made huge, risky bets on bad securities, and collapsed because of mismanagement. A "run on the bank" may have had something to do with it, but that's always the case: companies don't go under until people stop giving them money.

But in a financial press with a lot of very similar content, we should at least give Portfolio props for doing something a little different.

MAJOR PAPERS:

• The Wall Street Journal reported that executives from Ford Motor Company (NYSE: F) informed plant managers and union representatives that they intend to reduce overtime and that additional buyouts of union workers were necessary to cut costs.
• The Wall Street Journal also reported that federal prosecutors are preparing to file criminal charges against Ralph Cioffi and Matthew Tannin, two hedge fund managers at Bear Stearns, now part of JP Morgan Chase & Co (NYSE: JPM), with securities fraud.
• Investors who helped U.S. financial companies raise capital are currently losing nearly $10B on paper, according to an analysis by the Financial Times.

OTHER PAPERS:

• Fortune reported that the materials used to build Apple Inc's (NASDAQ: AAPL) new 3G iPhone could cost as little as $100, while the components of the old iPhone cost $170, according to analysis by Portelligent, an Austin, Texas-based teardown specialist.
• Steve Jobs appeared to be extremely thin during the unveiling of Apple's new iPhone last Monday, causing speculation by observers. Fortune speculated that Jobs' weight loss over the years is being caused by a complex operation he underwent in 2004, in order to treat a rare type of pancreatic cancer.

• If Lehman (LEH) isn't the second coming of Bear Stearns, won't "sell the rumor, buy the news" come into play?
  
  
Why can't I shake the sense that a serious downside dislocation is lurking in the wings this summer?


Given the massive two-sided directional potential, have you defined your risk (both ways) in kind?


After all, doesn't setting stops remove emotion?


Another day, another dime (10%) for WaMu (WM) the killer whale?


• What does it say that the New York Stock Exchange internals are still flat to the share?
  
  
• The kid' from Oakland - what did you expect?
  
  
How could it possibly take me this long to see Charlie Wilson's War?

R.P.

This post is part of a series on some of the most memorable companies that have disappeared.

Going, going, gone!

No more Bear Stearns. What a shame. It did not have to be, but alas -- bad management, greed, and too much negativity on Wall Street made it unsustainable when sustainability is the word of the day. It is, or should I say was, one of the foremost investment banks on Wall Street for many decades.

JPMorgan Chase (NYSE: JPM) completed it acquisition of Bear Stearns (NYSE: BSC) on May 30, 2008. As a result, Fitch Ratings has upgraded the ratings of BSC and removed them from Rating Watch Positive, where they were originally placed on March 17. As the direct and sole owner of BSC, JPM has assumed the capital structure of BSC.

Bear Stearns had been one of the top investment banking, clearing, and brokerage firms in the United States, serving major corporations, institutions, governments, and high net worth individuals. Through several subsidiaries, it provided asset management, lending, and merger and acquisition advisory services. It's been a leading market-maker for NYSE-listed securities (through Bear Wagner Specialists), as well as for OTC shares, corporate and government bonds, and derivative products.

It was these derivative loan instruments that did them in. Bear Stearns, a company that for decades was relied upon to help its customers assess risk, fell short when it came to managing its own. Management was not watching very closely, and if they were, they did not understand what they were seeing. (See Serious Money: The page on Buffett Part V: Company Management.)

TheStreet.com's Jim Cramer says lots of names out there have genuine earnings power.

At an investment symposium I attended last night, someone asked me whether I thought Lehman Brothers (NYSE: LEH) (Cramer's Take) was going under. I said, no, no I didn't think so. It's got a great franchise with a good cash position, reduced leverage, much better management than Bear and a buyback that's kicking in that wouldn't if things were as bad as the bears make it out to be.

So, the individual asked, would I buy the stock? I said, "Why the heck would I do that? To catch a 2- or 3-point rally? There is no earnings power at Lehman."

I explained that some stocks are neither longs nor shorts -- that, to me, is Lehman. There's no reason to short it, because I don't think it is going under but many are betting that way, and there is no reason to go long it, because the place is set up for a period of big fees from fixed-income products, from structured products, but clients have at last figured out that they will lose their jobs if they keep buying this nonsense.

It took about ten minutes in a special meeting of the shareholders to approve the sale, acquisition or bail-out of Bear Stearns (NYSE: BSC) to JPMorgan Chase (NYSE: JPM). You can call it what you will, but the illustrious company is coming to a dismal end.

There was not much to say at Thursdays short meeting, but in brief remarks to attendees, James Cayne, who was Bear's chief executive when its problems took hold last summer, said "I have no anger, only regret," The New York Times reported. "14,000 families were affected. I personally apologize. I feel an enormous amount of pain and management feels an enormous amount of pain."

Pain and billions of dollars, to say the least. When the Federal Reserve, led by Ben Bernanke, arranged this shot-gun wedding, JPM was offering $2 per share for BSC and then upped the price to $10, prompting me to write JPMorgan's $10 offer for Bear still too cheap!. In any event that was the price and that's where it stands. Ten bucks for a company that was trading at $150 in the not too distant past. The last sixty bucks evaporated in one week!

It did not have to be this way, but alas -- bad management, greed and too much negativity on Wall Street made it unsustainable when sustainability is the word of the day. I have been doing a series of stories on Warren Buffett's ideas on investment and this one comes to mind: Serious Money: The page on Buffett Part V: Company Management.

So BSC will be no more and JPM will continue to prosper having far better management. Perhaps BSC should post signs to that effect in its offices, just like an unsuccessful business might after a change: UNDER NEW MANAGEMENT!

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns. Disclosure: I am a shareholder in BSC.

JPMorgan Chase (NYSE: JPM) shares are trading higher on news that shareholders of Bear Stearns Cos. (NYSE: BSC) have approved JPM's $2.2 billion buyout of the investment bank. JPM will buy BSC for about $10 a share. The deal is expected to become official tomorrow. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JPM.

After hitting a one-year high of $52.31 last May, the stock hit a one-year low of $36.01 in March. JPM opened this morning at $42.69. So far today the stock has hit a low of $42.29 and a high of $44.06. As of 12:15, JPM is trading at $43.79, up 0.93 (2.2%). The chart for JPM looks bullish and deteriorating, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 11.1% return in just seven weeks as long as JPM is above $37.50 at July expiration. JPMorgan would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.

JPM hasn't been below $7.50 at all in the past year except for a short time in March and has shown support around $42 recently. This trade could be risky if the financial sector suffers some more in the coming months, but even if that happens, that position could be protected by support the stock might find just above $40, where it bottomed out twice in the past two months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in JPM or BSC.

TheStreet.com's Jim Cramer says some segments are doing well, but the losses in Britain show how bad it is.

If you think the disclosure is bad for these financial insurers here, it is every bit as poor over there in the U.K., where we just learned that housing prices dropped the most ever on record.

Most of the major monoline insurers, and of course AIG (NYSE: AIG) (Cramer's Take), have exposure to Britain in ways that we are all too familiar with over here. The only difference is that I believe the trajectory was considered far more certain over there than here. AIG in particular bragged about this business in December, to show their diversification away from the U.S. Kind of like how Bear (NYSE: BSC) (Cramer's Take) bragged that by putting a lot of different mortgages together from Florida and California and the rest of the country and varying their ratings you have created a wondrous, diversified instrument called a CDO.

Before the bell: Futures mixed ahead of GDP; after COST, SHLD reporting

Bear Stearns (NYSE: BSC) shareholders are due to approve the buyout by JPMorgan Chase (NYSE: JPM) today, marking what many feel as an end of an era as the 85-year-old company collapsed due to the subprime mortgage crisis.

The chief executives of UAL Corp. (NASDAQ: UAUA) United Airlines and US Airways (NYSE: LCC) are set to meet today to discuss a possible deal despite concerns that threaten the deal, according to two people briefed on the discussions, the AP reported. Stocks of both airlines are up over 2% in premarket trading.

In other deal news, Yahoo (NASDAQ: YHOO) CEO Jerry Yang said that Yahoo is not a company under siege and that he is still waiting for a clearer proposal from Microsoft Corp. (NASDAQ: MSFT) about a possible partnership between the two firms. He said said that Yahoo "did not walk away from the proposal - Microsoft did. We were willing to do the deal on the right terms."

Before the bell: Futures higher as oil drops further

Exxon Mobil (NYSE: XOM) is set to face disgruntled shareholders, including members of the Rockefeller family at its annual meeting today. They want to split split Exxon's chairman and chief executive positions. Other proposals include seven about the company's environmental policies.

The Wall Street Journal reported that Bear Stearns (NYSE: BSC) plans to hand over documents to the Securities and Exchange Commission showing that several Wall Street firms, including Goldman Sachs (NYSE: GS), Citadel Investment Group and Paulson & Co., cut their exposure to Bear in the weeks leading up to its collapse.

United Parcel Service Inc (NYSE: UPS) shares rose in Europe after Merrill Lynch upgraded the company's stock from Neutral to Buy.

MAJOR PAPERS:

• In part two of a series to help explain the reasons why The Bear Stearns Companies Inc (NYSE: BSC) collapsed, the Wall Street Journal said that executives believed they were about to turn a corner, but fear and rumors sent lenders, trading partners and clients running.
• The Wall Street Journal also reported that a host of factors could derail InBev NV from bidding for Anheuser-Busch Companies Inc (NYSE: BUD), including the cultural differences between the two, protests by politicians over foreign ownership of a U.S. company during an election year and possible unrest from Anheuser distributors and employees.
• Following the recent indictment of one of the bank's former senior executives, the Financial Times reported that UBS AG (NYSE: UBS) told members of its former private banking team not to travel to America. The restrictions suggest UBS is concerned investigations by the SEC may widen.

WEB SITES:

• The latest set of photos that supposedly show parts of Apple Inc's (NASDAQ: AAPL) 3G iPhone, released by Dutch website iPhoneclub.nl, look identical to the previously released pictures that were supposedly photos of the 3G iPhone, Engadget reported.

MAJOR PAPERS:

• Last December Chemtura Corporation (NYSE: CEM), a specialty chemicals company with a market cap of about $1.9B, said it might sell itself, and now The Blackstone Group LP (NYSE: BX) and Apollo Management are in talks to buy the company, the Wall Street Journal reported.
• In part one of a series to help explain the reasons why The Bear Stearns Companies (NYSE: BSC) collapsed, the Wall Street Journal said that the troubled firm was torn apart by executives who couldn't agree on what course to take, including raising capital and slicing mortgage and related bonds from its inventory. And each of about six attempts to raise capital fell part.

OTHER PAPERS:

• The American investor and Berkshire Hathaway Inc (NYSE: BRK.A) chief Warren Buffett said the United States is already in a recession that is deeper and will last longer than the public expects, the Economic Times reported.
• According to the Telegraph, Barclays Plc (NYSE: BCS) is planning to sell Barclays Life Assurance Company, its life assurance arm, which has over GBP7B of funds under management. Sources believe potential bidders for the unit may include Pearl, Swiss Reinsurance Company (OTC: SWCEY), General Re, Canada Life and XL Re. Market commentators believe that on an embedded value basis, the unit is currently valued at around GBP1B.