GTC Biotherapeutics (fka GTCB)

[jessellivermore]

Dear dodah...FYI,

Time Magazine: Sept 29, 2008

Lehman's fall shows the downside of using borrowed money...

To compensate for its relatively small size and skinny capital base, Lehman took risks that proved too large. To keep profits growing, Lehman borrowed huge sums relative to its size. Its debts were about 35 times its capital, far higher than its peer groups ratio.. It plunged heavily into real estate ventures that cratered.

Here's how leverage works in reverse. When thing go well as they did until last year, Lehman was immensely profitable.
If you borrow 35 times your capital (nb. if GTC were allowed this they would have over $300 Mil to operate with.)and those investments rise only 1% you have made 35% on you money. If however they move against you as they did with Lehman--a 1%or2% drop in the value of your assets puts your future in doubt.

This is the real story.