Yesterday Lehman Brothers stock was cut in half from around $15 to $7.80 in just one day. Today as of this writing, this stock is still trading around $7.80 with its market capitalization of just $5.4 Billion. Is Lehman destined to doom just like Bear Stearns? Some naysayer and Lehman shorties will definitely say so.  However I beg to differ. This drop represents a big opportunity to scoop-up Lehman shares at a huge discounts. When others are fearful then it is the time to be greedy. Here is my reasoning:   Lehman by no means has a liquidity problem. In fact its liquidity is solid due to the fact that Lehman is one of a handful of wall-street firms that is able to borrow money directly from Fed. So run off the bank situation like Bear Stearns won’t happen.   According to many analyst, Lehman’s asset management division including Neuberger Berman alone is worth somewhere between $8 - $10 billion. That means the market is now valuing Lehman as a whole for less than its one part alone. That really doesn’t make sense and seems to me that the market is in fear and panic mode. Lehman plans to sell 55% of its asset management division, which should generate about $4.4 - $5.5 billion in cash infusion. Lehman also reduced its dividend payout by 93% that will save the firm $450 million a year. This two moves should give Lehman enough capital to ride out this financial storm which many analyst think is in its last leg.   Most of Lehman mortgage backed securities are in commercial property. Although this asset is keep falling in value however it is not as bad as the residential property. Lehman already has plan to spin-off the majority of this asset (around $25-$30 billion) into a new company in first quarter 2009. This move will reduce the firm’s exposure to the mortgage market. Also keep in mind that with the Fannie and Freddie take over by the US Treasury, it is likely that the mortgage market will stabilized and finding the bottom soon in the coming months, probably in the first or second quarter of 2009. As a result of that, it is safe to assume that Lehman won’t take more big write-down in its commercial mortgage portfolio in the future.   According to its preliminary third quarter report released this morning. Lehman’s stockholder equity as of Aug 31 was estimated at $28 billion. It has $42 billion in liquidity pool that represent 11% of Tier 1 ratio. Doesn’t sound like this firm have liquidity problem.   With all of these facts, I believe that Lehman’s current stock price is deeply discounted. Sure there are some risks remain. However at this price ($7.80), this company is hard to pass-by, it may present huge reward for bold investors.