- Financial adviser Stephen Bearce bought 100 Bear Stearns shares just days before JPMorgan Chase scooped up the investment bank in 2008 at a steep discount.
- After more than 11 years of holding the fractions of JPMorgan shares he received in the deal, Bearce just broke even on the trade this month, The Wall Street Journal reported.
- Bear Stearns shareholders received one-fifth of a JPMorgan share when the deal closed, and December marked the first time those fractional shares reached the $30 closing price Bear Stearns saw before the acquisition was announced.
- Bearce has since made a few dollars from the trade, but he has no plans on selling and will instead hold the shares as a reminder that he "tried to catch a falling knife," he told The Journal.
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Financial adviser Stephen Bearce bought 100 shares of Bear Stearns at roughly $30 each on March 14, 2008, and only broke even on the trade this month, The Wall Street Journal reported Wednesday.
The Friday trade came just before JPMorgan Chase bought the investment bank in a weekend deal that valued Bear Stearns far lower than the price Bearce bought shares at. The acquisition was one of many born from the financial crisis.
When the deal closed, those holding Bear Stearns stock received about one-fifth of a JPMorgan share, worth about $9.35. December marked the first time the fraction of a share reached $30, Bear Stearns's closing price the Friday before the JPMorgan takeover, The Journal reported.
"It only took 4209 days but I am finally even!!!" Bearce told The Journal in an email.
Since Bearce's trade, JPMorgan stock has tripled to $137.58 from $36.54. The surging price pushed CEO Jamie Dimon's stake over the $1 billion threshold for the first time, and his purchases made after the financial crisis have netted him about $150 million, according to The Journal.
Bank stocks have enjoyed healthy gains since 2016, with looser regulations and the Trump administration's tax cut boosting profits. Nearly all major stocks rose through 2019, with Federal Reserve rate cuts and the "phase-one" US-China trade deal supporting higher share prices through the second half of the year.
JPMorgan stock is up roughly 40% year-to-date.
Though it took more than 11 years for Bearce's trade to post minor gains, others saw far larger swaths of wealth wiped out in the deal. The shares tumbled from roughly $30 per share to $10 in the month before the acquisition was finalized, leaving shareholders little chance to recoup two-thirds of the stock's value.
Bearce has now profited a few dollars from his 2008 trade, but the Virginia-based financial adviser has no plans to sell.
"I tried to catch a falling knife," Bearce told The Journal. "I'm going to keep reminding myself how dangerous knives are. Let this be a lesson."
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