Hopes of higher bid boosts Bear shares
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NEW YORK (Reuters) - Bear Stearns Cos Inc shares surged more than 65 percent on Tuesday, as investors bet a new bidder could emerge for the investment bank that agreed to be bought by JPMorgan Chase & Co .Bear Stearns stock gained $3.19 to $8.04 in late morning New York Stock Exchange trading, well above the $2 per share offered by JPMorgan."You got your risk arbitrage traders that don't think this thing is going through, so they are bidding it up," said Jim Huguet, chief executive of Great Companies LLC, a Tampa, Florida, investment adviser. "That's purely speculation. It's not investing."Huguet said he thought it was unlikely that another bidder would come forward and believed Bear Stearns would likely fail if the deal falls apart.JPMorgan agreed on Sunday to buy Bear Stearns, which was slammed by a sudden cash crunch in an all-stock deal that valued the company -- recently ranked as the No. 5 U.S. investment bank -- at about $236 million.Kathy Boyle, president of Chapin Hill Advisors Inc, said the deal was put together in a rush over the weekend and the parties "low-balled it.""I would assume that maybe somebody is coming in for a piece of the book and that would push valuations up," said Boyle, who owns Bear preferred securities and has about $100 million under management.She also said an expectation of a rate cut by the U.S. Federal Reserve was boosting financial stocks in general."A lot of this is what we call a 'dead cat bounce,"' Boyle said. "Everything got overdone."As part of JPMorgan's offer, the Fed, which has approved the deal, agreed to provide $30 billion in special financing to fund Bear Stearns' less liquid assets.(Reporting by Paritosh Bansal and Chris Reiter; Editing by Maureen Bavdek)
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