Lewis, Barrow Hanley Lose Combined $2 Billion on Bear Stakes

By Katherine Burton and Sree Vidya Bhaktavatsalam
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March 17 (Bloomberg) -- Joseph Lewis, the billionaire investor who bought 9.4 percent of Bear Stearns Cos. last year, lost $1.16 billion on his stake after JPMorgan Chase & Co. agreed to buy the securities firm for $2 a share.

Lewis, the New York-based firm's second-largest holder, paid an average of about $107 apiece for 11 million shares, according to a filing submitted last year to the Securities and Exchange Commission. The stake has plunged 98 percent in value since the purchases. Bear's biggest investor at year-end was money manager Barrow Hanley Mewhinney & Strauss Inc., whose 9.7 percent holding has fallen by $991 million.

New York-based JPMorgan, the third-largest U.S. bank, said yesterday it will pay about $240 million for Bear, which was crippled last week after clients pulled money and investors balked at trading with the firm because of losses on its subprime-mortgage holdings. Bear's market value was $13.6 billion at Nov. 30, the end of its fiscal year.

``This was done in the market's best interests,'' said David Hendler, an analyst at CreditSights Inc., a financial- research firm in New York. ``Unfortunately Bear Stearns shareholders are at the short end of the stick and they only got this token payment.''

Lewis, a former foreign exchange trader who was born in an apartment above a pub in London's East End, declined to comment through a spokesman. The loss is almost half his $2.5 billion fortune, as estimated by Forbes magazine in its 2007 survey.

Barrow Hanley president James Barrow didn't immediately return a phone call yesterday to the firm's Dallas headquarters.

Investment bank Morgan Stanley, the third-largest holder with a 5.4 percent stake, may have lost about $546 million since Dec. 31. James Cayne, Bear's former chief executive officer and fourth-largest holder with a 4.9 percent stake, saw the value of his holding drop by $504 million.

Bear's fifth-largest shareholder, Baltimore-based Legg Mason Capital Management, a unit of Legg Mason Inc. run by Bill Miller, may be down $493 million.

Messages left at the offices of Cayne, Miller and Jim Wiggins, a spokesman for New York-based Morgan Stanley, weren't immediately returned.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net.
Last Updated: March 17, 2008 00:25 EDT

Screw these schmucks; how much of the money in Bear Stearns came from the little guy.

the only people truly burned by this deal are the ones who owned BSC shares.

Nope. They printed it up on the fly. You're kidding yourself if you think that this bailout was backed by any actual money.

It might have been if we weren't spending Trillions of dollars overseas, but that topic I'm sure is more fully explored in the world politics forum.

Now, that's not to say that we won't pay for it anyway, because of course we will. We'll pay for it in the weakening of the dollar and the increase in inflation. It's stagflation time folks.