Why Bear Stearns Won't Be Sold

The Bear Stearns rumors are back. "Bear Stearns Could Become Takeover Target," we're breathlessly told, although if you read all the way to the final four words of the article, you do find out at the end that, for now at least, "Bear isn’t for sale." Glad that's cleared up.

The idea is that if Bear becomes cheaper, it could get taken over. But I have a feeling that's entirely wrong. A $10 drop from current levels would take the stock all the way down to – oh, where it was back in September. When there was no furious takeover speculation.

More to the point, Bear Stearns is only slightly less closely held than Dow Jones. Its employees in general, and its CEO in particular, have de facto control over whether the company is sold. And, like any bankers, they tend to like to sell high, rather than sell out during a period of distress.

Personally, I can't imagine Cayne selling out under any circumstances. But if he is going to sell out, I'm sure it would be at a significant premium to Bear's all-time high. That's the number which matters, not the premium to where the stock happens to be trading today or next week.