shares are up 30% this year, and now its top executives could be looking to take some profits.
A day after Bear reported a 22% gain in fourth-quarter earnings, the investment bank's six top executives filed a registration statement covering the potential sale of up to 1.58 million shares. The firm won't receive any proceeds from the stock sales, which can occur in both market transactions or negotiated deals.
The biggest potential seller in the group is Warren Spector, Bear's president and co-chief operating officer, who can sell up to 941,939 shares under the registration. James Cayne, Bear's chairman and chief executive officer, can sell up to 354,849 shares under the registration. Others included in the filing include Mark Lehman, an executive vice president, and Michael Minikes, the treasurer.
"There is no assurance that any of the selling stockholders will sell any or all of the shares offered," the filing notes.
With Bear's stock trading around $102, Cayne and Bear's other top brass are looking at a rich return on shares that were awarded to them as part of the firm's executive compensation plan.
The big registration could throw cold water on speculation that Bear is about to be acquired by some European bank such as British-based
. The merger talk is one of the main reason's Bear's stock has far outperformed its Wall Street peers.
"The big selling should put the kibosh on any near-term merger,'' says Fox-Pitt Kelton brokerage analyst David Trone.
Trone says there is some logic to the buyout speculation, because Bear's big hedge fund business is an attractive selling point. He says a lot of banks and brokerages are looking to get into the prime brokerage business, and Bear's hedge-fund finance-and-clearing unit is firing on all cylinders right now.
In the fourth quarter, revenue in Bear's stock-clearing division, which includes the prime brokerage, rose 19% from the third quarter of this year. Margin lending surged in the quarter as hedge funds did more trading with borrowed money. Bear says November was the best month of the year for hedge funds.
But as long as Bear's stock sells above $100 a share, Trone believes few banks will be willing to bite.
"I don't think anything is happening,'' says Trone, who has a market weight, or neutral, recommendation on the stock. "I would suspect there were some discussions in the fall at some point, but they didn't amount to anything. Their body language is focused on remaining independent.''
In the coming days, however, it won't just be Bear's top executives who might be tempted to sell.
Last month, Bear, on the advice of its lawyers, delayed the distribution of restricted shares to thousands of employees until after the firm reported earnings. The firm, according to a memo explaining the delay, planned to begin distributing those shares today.
It's expected that most employees will sell most of those shares shortly after the distribution. In the memo, Bear gave employees until Dec. 17 to sign a "power of attorney" form authorizing the firm "as to the disposition of the shares," including selling them.
A flood of new shares coming into the market could keep a ceiling on Bear's stock for some time, if not drive it down.