Overview
While the financial sector of the market rarely has the bells and whistles that drive the Internet, telecommunications and biotech, it is a mainstay of the markets. The financial sector is essential for the growth of new technologies and breakthroughs, while supporting established industries and providing access to funds from a local ATM to global currency exchanges. This business sector includes local banks and thrifts, money center banks, the start-up online trading services and the providers of financial services to governments. In this GoldStar Report, we peer into the financial sector and specifically Lehman Brothers Holdings, Inc.
Lehman Brothers Holdings, Inc. (NYSE: LEH) has not always been a member of the S&P 100, S&P 500, or the New York Stock Exchange. Originally founded in 1850 in the American South by German immigrant Henry Lehman, the company moved to New York City after the Civil War. Once in New York, the company helped to establish the Cotton Exchange and joined the NYSE in 1887. Over the years, the company has been involved with the growth of America on various levels, from railroad bonds, to arranging financings for 20th Century Fox and Paramount. Over the years, Lehman Brothers has also completed successful IPO’s for companies such as Hertz and many others. It’s hard to say if Mr. Henry Lehman ever imagined his company would one day be a financial leader with assets totaling over 381 billion dollars.
Today the company continues to grow with the country, being the first to underwrite corporate debt on the Internet. The company’s operations spread diversely across the financial field including institutional customer flow activities, prime brokerage, research, emerging market securities; mortgage- and asset-backed securities and many others. Net income for the company (quarter ending August 31, 2005) totaled 879 million dollars, with total revenues of 3.9 billion dollars over nine months. Total shares outstanding exceed 272 million and market cap is approximately 29 billion dollars. With a book value of $54.91, insiders of the company include Citigroup, Barclays Bank PLC, Morgan Stanley, Putnam Investment Management and AXA, to name a few.
As with all investments, no one criterion is the secret to success. There are many factors that must be evaluated in any investment, including history, industry, world and personal economics. Perhaps as Warren Buffett has said, “Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.” Prior to any investment speak with your financial advisor.
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Divisions
Lehman Brothers operates in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity in local and international markets.
Equities - The Company provides services in U.S. listed and pan-European securities, electronic connectivity, equity research, program trading, options, exchange-traded funds, convertibles, and prime brokerage operations.
Fixed Income - The Company is a leading global market maker in U.S., European and Asian government securities, money market products, corporate high grade and high yield securities, mortgage- and asset-backed securities, preferred stock, bank loans, foreign exchange and derivative products.
Investment Banking - The Company is a global investment bank with investment bankers in 25 offices in 15 countries across the globe. The Investment Banking Division provides comprehensive financial advisory and capital raising services to corporations and governments worldwide.
Lehman Brothers Bank FSB - Lehman Brothers Bank FSB is a wholly owned subsidiary of the Company. The Bank is a member of the Federal Home Loan Bank System. Deposits are insured by the Savings Association Insurance Fund, which is administered by the Federal Deposit Insurance Corporation.
Investment Management - Investment Management encompasses Private Investment Management, Asset Management, and Private Equity. Services included within these divisions are wealth advisory, privately negotiated transactions, and a variety of distribution channels to individuals and institutions.
