Just How Big Was Lehman's Buyback?

Was I too hasty in being nice about the WSJ reporting on Lehman's stock buyback? I said that in the absence of any evidence to the contrary, one should probably take the WSJ's assertion that the buyback was "large" at face value. But now Antony Currie of Breaking Views has a column out saying that the buyback was for only "a trifling amount" and "a small sum" - no more than 2 million shares, he tells me. He writes:

The buyback seems to have been done as part of the company's regular business of minimising the dilutive effect of paying employees with stock and options.

And CNBC's Charlie Gasparino has got his hands on an internal Lehman Brothers memo which seems to back up Currie's position. Here's what he reported on air:

One of the items had to do with stories that came out yesterday about stock buybacks, were they buying back stock amid the financial crisis to prop up shares. They are saying, in the memo, the firm purchased quote "a small number of shares" as part of what they described as its ongoing and regular purchase program to minimize the dilution related to employee stock awards. This is part of what they do all the time at this point in time. They said they only purchased 1.3 million shares compared to volume, which is larger than that. Also they said in the memo, they are not in the market buying back shares today. So, this is what Lehman Brothers has put out in a memo.

To put those 1.3 million shares in perspective, total volume in Lehman Brothers shares yesterday was over 135 million shares - a hundred times greater. So when the WSJ's Susanne Craig writes that the buyback "helped the stock pare its losses Tuesday," maybe a little natural skepticism might be in order after all. Could a million-share trade have had such an effect? Maybe, but it's not exactly probable.

And this is where I wish that journalists were more like bloggers. Yes, they're more reliable. But at the same time, the WSJ and Breaking Views (which are partners, with BV having a daily column in the WSJ) will never explore their differences in public, as bloggers would, with the WSJ getting specific about just how big they think the buyback was. And so we outside observers don't have any idea who to believe on this front, or even whether the WSJ still thinks the buyback really was large. But for the time being, if Gasparino's got an internal memo, I'm inclined to go with that.

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