Hard-to-Sell Assets
Firm Lehman Brothers Goldman Sachs Morgan Stanley Merrill Lynch
Res. Mortgage $24.3 $6.6 $18.8 $6.5
Comm. Real Estate $39.8 $16.6 $17.6 $22.1
Lev. Loans $11.5 $22.0 $7.5 $12.7
Total $75.6 $45.2 $43.9 $41.3

Source: Citigroup. All figures in billions.

The subjects are Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., and Morgan Stanley, and the shooter is Citigroup’s Prashant Bhatia, who lowered earnings estimates on all three due to the “difficult operating environment, characterized by lower client-related trading volumes and losses on hard-to-sell assets.”

The note is taking a toll in premarket action. Shares of Lehman have been hit the hardest, losing 5.3%, while Goldman is off by 1.4% and Morgan has declined by 1.3%. Mr. Bhatia projects another round of billion-dollar write-downs for all three companies when they report earnings in September.

Of the three, he is most critical of Lehman, which has been dropping more sharply than its rivals in recent days due to liquidity concerns and chatter about asset sales. Mr. Bhatia expects a $2.9 billion write-down at Lehman, and rates the company as a speculative investment, but adds that Lehman’s price “is discounting more erosion in book value than we anticipate.” Still, the firm has the largest amount of what he calls “hard to sell” assets, at $75.6 billion.

Goldman’s write-down estimate is $1.8 billion, and Morgan’s write-downs are pegged at $1.7 billion.