Bove: Lehman saga ending soon

Richard Bove is really hammering home a point about Lehman Brothers: The investment bank has big problems that it better deal with it soon.

The Ladenburg Thalmann analyst put out a new research note — the second such note in a week –saying Lehman’s management will have to address its issues rather than just “toughing it out,” or it could face a hostile takeover bid.

What does the investment bank need to do? Says Bove: Lehman must more aggressively write down some of its real estate portfolio and hedge fund investments, raise new capital and rebuild relationships with key employees hurt by the stock’s nosedive.

“I repeat, that if Lehman does not take these actions it is likely that an outsider will do this for the firm through a hostile takeover,” Bove said.

There is good reason to hear the man out. He’s been right before. He was one of the first banking analysts to recommend selling financial stocks as credit market problems began last year.

Lehman is looking at cutting some 1,200 jobs in its latest round of cost cutting, a source said. Bove said that announcement will likely be the first in a series that may be made in the next 10 days.

”This saga is not likely to continue much longer,” Bove wrote. But he added that he believed the result will be a “positive one,” keeping his “buy” rating on the stock.

(Photo credit: Reuters)