LEH : Lehman Brothers talks to raise capital

Lehman Brothers, a big broker with big trouble. Everybody know Lehman's value shrunk considerably in the last year. Like most big financials Lehman lost some big value with the sub prime mess and other credit related structured products. They have used leverage and they are just understanding it. For Lehman Brothers the institution, this possible stock issue is good for the reason that it will increase Lehman's chances to go throughout the credit crisis and the economic slowdown. From the shareholder point of view, the new capital will enable the management to decrease leverage and invest in non-correlated assets. However, the last time Lehman Brothers was featured in a Reuters article with talks about a 6bln equity deal, the stock lost 13.64% in the following day(06/11/08). "The sheer size of such a dilutive capital raise will put serious pressure on the bank's ability to deliver on meaningful earnings-per-share growth over the near to medium term," is what Oppenheimer & Co analyst Meredith Whitney said in a research note, just after the June talks of capital raise. I expect the stock to go lower for the simple reason that a bank that raises equity is most of the time, weak. I would not be long Lehman.