McAllister Ranch Development Emblematic of Lehman Brothers Fall

The abandoned resort town of McAllister ranch is emblematic of the problems facing Lehman Bros as it struggles to survive and remain independent.

Lehman Bros. after Bear Stearns has suffered perhaps the most from the unfolding credit crisis.  It not only has problems with CDOs, structured investments, etc. but it also made direct bets on the real estate market.  In an article, Fortune goes into the factors that led to Lehman's downfall and discusses how investments like McAllister ranch are putting the venerable firm into a world of hurt.

But McAllister ranch is just the tip of the iceberg for Lehman.  As the article states:

"Brad Hintz, a former Lehman chief financial officer who now follows the firm as an analyst at Alliance Bernstein, wrote recently that Lehman has more than 2.5 times its entire net worth tied up in complex, hard-to-value securitized products."

Lehman has other problems and Fortune speculates that the company will eventually be purchased.  To show you how much times have changed, Fortune lauded Lehman just two years ago as a super hot deal machine

This adds to my conviction that once the mainstream business press start gushing over any company it's time to get out.

Remember: buy low, sell high.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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