Opening Bell: 09.02.08

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KDB Chief Says Banks Are Seeking Lehman Deal
It looks like its for real this time. No more unnamed sources or suspicions of bungled translations. This time we have it straight from a named source, Min Euoo-sung, the governor of state-owned Korean Development Bank. He has said that discussions were under way ''to form a consortium with private banks as (we) believe it is more desirable to acquire Lehman Brothers jointly rather than alone.'' There's still a big gap on pricing, he added.

Retail investors in US equities hits low (FT)

The holdings of retail investors continue to decline relative to institutional holders. The latest data available is from 2006, when retail investors held just 34% of all stocks and just 24% of the top 1000 companies. That's a steep fall of from earlier periods. In the fifties, retail counted for 94% of stock holdings. In 1980, it was 63%. It's got to make you wonder about how well the SEC, which was built to protect individual investors (or at least to bolster the confidence of those investors), fits with the reality of a world dominated by large investment funds.
You Must Remember This? KKR Hopes Not (WSJ)
KKR, which has now filed the prospectus for its initial public offering, already has two publicly traded investment vehicles. Neither is a a pretty sight, and both need restructuring. KKR Private Equity investors may be bailed out by the parent. KKR Financial Holdings, which was formed to buy mortgage products in an attempt to show that KKR could do more than buyouts, had to change strategies to buying top-rated corporate debt and still trades below blook value. Last year KFN last $100 million while its managers took home $17.5 million in "incentive fees" and millions more in other fees.

Hedge Funds Are Caught in a Tight Spot
(WSJ)
Although the big letters above this story tout bad times for hedge funds, the real story here is performance divergence. Market volatility has created some huge winners in the hedge fund market and some huge losers, and investors are fleeing the latter for the former. Fear of investor flight is prompting many hedge funds to adopt a more conservative strategy, and to hold more liquid investments to made redemptions easier to handle.

Oil Falls as Companies Prepare to Resume Output After Hurricane
(Bloomberg)
Oil dropped off a cliff in European trading, dropping more than 8 percent. The decline is attributed to the lack of structural damage from hurricane Gustav. Hannah and Ike, the next two big storms now brewing out over the Atlantic, are expected to avoid the Gulf of Mexico altogether.
(Joe Weisenthal is on vacation.)

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