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NEW YORK — Shares of Lehman Brothers Holdings Inc. jumped in over-the-counter trading Monday despite analysts warnings that prices will eventually dwindle down to nothing.
The 158-year-old Lehman filed for Chapter 11 bankruptcy protection in September, and its stock was suspended from trading on the New York Stock Exchange.
Still, shares of Lehman, which have sat at around 5 cents over the past several months, surged as much as 17 cents, or more than 100 percent, to a high of 32 cents intraday Monday, closing at 19 cents, up 4 cents, on the over-the-counter Pink Sheets. The stock has traded heavily over the past few days during a period when activity normally fades as traders take vacations.
"In theory, after you pay off creditors there should be nothing left, so there just shouldn't be any value in the stock," said Anton Schutz, portfolio manager at Burnham Financial Industries Fund. "Why they're still trading is a question everyone is asking. It's sort of crazy."
Investors are also still trading other "zombie" companies that technically are alive, such as Fannie Mae, Freddie Mac and American International Group Inc. All three are majority-owned by the government and are losing huge sums of money.
Schutz said it may be boredom, and most of the activity involves day traders aiming to profit from short-term price swings. He likens the frantic short-selling to how small Internet companies traded during the dot-com boom of the 1990s.
"Most knew those lower quality companies were near zero, but they still traded every day," Schutz said. "In the end, they were worth nothing."
Since it entered Chapter 11, Lehman has sold off its most valuable units. The remaining Lehman assets are tied up as lawyers and advisers wind down derivative contracts to pay off creditors.
