Mr Cooper Group Inc (COOP)

[DJN]

Lehman, WaMu Join Zombie Dance

http://www.thestreet.com/story/10593702/1/lehman-wamu-join-zombie-dance.html?cm_ven=GOOGLEFI

09/02/09 - 11:42 AM EDT Be the First to Comment

That's right, shares of Lehman Brothers Holdings and Washington Mutual have joined other financial zombies like Citigroup (C Quote), Fannie Mae (FNM Quote), Freddie Mac (FRE Quote) and AIG (AIG Quote) in seeing a huge surge in price and volume in the recent rally, before the tide began to stem on Tuesday.

Dear reader, tread carefully with these stocks. Celebrity trader Jon Najarian, co-founder of Optionmonster.com, told the New York Post the buying is "more than just the dash for trash," but the reasons are highly speculative.

In an interview with TheStreet.com, Najarian argued that if the bankruptcy judge decided to keep Lehman running to allow it to have a better chance of making paying off creditors, he might pay just 80 cents on the dollar to creditors. From the $6 billion Lehman has collected so far, that would leave it with a market cap of $1.2 billion, or about $2 per share, Najarian reasons.

But who is to say the judge would do such a thing? Just because Najarian is trading in this stuff doesn't mean most individual investors should be. He has access to sophisticated trading technology and a wide range of sources of information not accessible to most of us. He will jump in and out of a stock for reasons retail investors may not hear about for weeks.

"This is a 15-cent stock, so this is not for me to dangle something out there for people to go rush in and buy it," Najarian says.