Lewis tops up holding in Bear Stearns

Joe Lewis, the Bahamas-based British billionaire, has increased his stake in Bear Stearns to 8 per cent, indicating that he continues to believe the shares are undervalued and are likely to rise.

In September, Bear disclosed that Mr Lewis, a long-time client of the bank and friend of Jimmy Cayne, Bear chief executive, had amassed a 7 per cent stake, making him the bank’s largest shareholder. Mr Cayne owns about 6 per cent of the shares.

Mr Lewis rarely makes public statements and has steadfastly declined to comment on his investment in Bear. He could not immediately be reached for comment on Friday. A Bear Stearns spokesman also declined to comment. People close to the matter have said Mr Lewis, who made his fortune as a trader, views Bear as a good value investment and has no plans to take an activist role at the bank.

Mr Lewis, who is said to be worth about $3bn, paid $860m, or an average of $106 dollars per share, to acquire his 7 per cent stake. On October 19, Mr Lewis bought an additional 1.6m shares in Bear for about $186m, or $118.80 per share.

Bear shares were up 1 per cent at $99.48 in midday trading on Friday. The shares are off nearly 40 per cent this year as Bear has been hit hard by the credit squeeze. Two hedge funds managed by the bank collapsed this summer amid bad mortgage bets. Bear reported a 61 per cent fall in third quarter earnings due to a huge plunge in fixed income revenue. The bank will report fourth quarter earnings later this month.

Analysts have said that Mr Lewis may also be making a bet that a larger rival will pay a premium to acquire Bear.