Until I have my video finished, start on this one:

[Or, click this.]

So, we read that JP Morgan upgraded Schering Plough today (largely-explaining yesterday’s price action — as the note was likely available to clients of the firm, before this morning’s release to the press).

Now, consider that JP Morgan has at least $798 million — at least! — and perhaps, $1.6 billion – of “skin in the Schering-Plough game“. How so?

It was a co-lead underwriter of the September 2007 Schering Euro note offering (Page S-38 of the linked SEC-filed prospectus).

J.P. Morgan – € 100,000,000 of 2010 Notes — € 300,000,000 of 2014 Notes

At recent spot rates, those 400 million euros are about $630 million. It also was an underwriter for $61 million of the SGP stock, and $111 million of the SGP converts, in August 2007:

Schering August 2007 common stock prospectus (See Page S-22):

J.P. Morgan Securities Inc. — 2,233,125 shares

But wait! — do not forget the 2007 Schering 6% converts (See Page S-50):

J.P. Morgan Securities Inc. — 444,375 shares

Me? — I’d think twice about the independence of J.P. Morgan’s analysts — Schering-friendly people often are quick to criticize Dr. Harlan Krumholz (among others) for perceived conflicts of interest, as an expert witness (re Vioxx, against Merck). I doubt he has at least $800 million “at stake” in Schering — but perhpas J.P. Morgan still does — either directly, or through what has turned out to be very bad advice to their clients — “Buy-in to SGP at $27.50!” — these folks have a combined $1.6 billion of Schering-Plough’s “egg on their faces“. That bears repeating.

Also, consider this dissenting article, as (more) independent (from whence the above-video was lifted):

Schering’s Plowing

“. . . .Schering, if you missed it, was all but sat on and misshapen by recent events. If nothing else, reasonable minds can agree on this: Its future is not under its control. The drugmaker pulls in more than half its profit from drugs it markets with another company – Merck(MRK – Cramer’s Take – Stockpickr) — and all other things being equal, this puts a portion of its fate out of its control.

The partnership means everything to Schering and, proportionally, not nearly as much to the larger Merck. Now add to the mix all the troubling implications a panel of cardiologists created when it said generics were just as good as the Schering-Merck name brands, which should only be used as a last resort, and you have an out-of-control near disaster on your hands. . . .“

More coming soon. . . .