Level Three Assets Growing
Frank Ingarra, an assistant portfolio manager at Hennessy Advisors Inc., which oversees $1.1 billion:
"Now there are even more of these hard-to-value assets that people have to get off their balance sheets.
If you can't trade them or give them to someone else, then at some level they'll have to be written down and I think that's bugging people."
Level 3 assets are mark to model or fantasy. When there are hardly any observable inputs, and the firm has to rely on in-house models.
According to filings with the SEC: Q108 Level 3 assets surged 39% to $96 billion at Goldman Sachs;
6.1% to $78 billion at Morgan Stanley and 1.3% to $42 billion at Lehman Brothers,
Level 3 % of total assets: Goldman Sachs 8.1%; Morgan Stanley 7.2%; Lehman Brothers 5.4%. FYI Bear Stearns Q407 total 7.1%.
Level 2 assets have no available price, but are valued based on "observable inputs", or prices of similar assets traded in the market.
Q108 Level 2 assets: Goldman Sachs $621 billion; Morgan Stanley $296 billion; Lehman Brothers $200 billion.
Level 1 assets are mark to market assets with readily available prices; Q108 Level 1 assets:
Goldman Sachs $135 billion; Morgan Stanley $128 billion; Lehman Brothers $61 billion.
The Nattering One muses...
Don't look at the scary data, the ratio of Level 2 & Level 3 assets for which pricing is speculative or fantasy to Level 1 assets for which prices readily exist.
"Now there are even more of these hard-to-value assets that people have to get off their balance sheets.
If you can't trade them or give them to someone else, then at some level they'll have to be written down and I think that's bugging people."
Level 3 assets are mark to model or fantasy. When there are hardly any observable inputs, and the firm has to rely on in-house models.
According to filings with the SEC: Q108 Level 3 assets surged 39% to $96 billion at Goldman Sachs;
6.1% to $78 billion at Morgan Stanley and 1.3% to $42 billion at Lehman Brothers,
Level 3 % of total assets: Goldman Sachs 8.1%; Morgan Stanley 7.2%; Lehman Brothers 5.4%. FYI Bear Stearns Q407 total 7.1%.
Level 2 assets have no available price, but are valued based on "observable inputs", or prices of similar assets traded in the market.
Q108 Level 2 assets: Goldman Sachs $621 billion; Morgan Stanley $296 billion; Lehman Brothers $200 billion.
Level 1 assets are mark to market assets with readily available prices; Q108 Level 1 assets:
Goldman Sachs $135 billion; Morgan Stanley $128 billion; Lehman Brothers $61 billion.
The Nattering One muses...
Don't look at the scary data, the ratio of Level 2 & Level 3 assets for which pricing is speculative or fantasy to Level 1 assets for which prices readily exist.
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