Lehman Bros.’ profit jumps 27%

Lehman Bros. Holdings Inc., the nation’s fourth-largest investment bank, said Tuesday that robust stock trading and corporate buyouts pushed second-quarter profit up 27% in what may be a harbinger for other brokerage earnings due this week.

Gains from stock trading amid a record run on Wall Street and fees for advice on takeover deals helped drive Lehman’s business during the quarter, tempering a slump in the company’s fixed-income business, particularly the mortgage-backed securities operation that was hurt by a decline in the value of sub-prime loans.

For the three months ended May 31, profit after paying preferred dividends rose to $1.26 billion, or $2.21 a share, from $986 million, or $1.69 a share, a year earlier. Revenue rose 25% to $5.51 billion -- half of that coming from overseas. The results topped Wall Street projections for earnings and revenue.

Chairman and Chief Executive Richard Fuld, who has led Lehman since it was spun off from American Express in 1994, has transformed the company into one of Wall Street’s biggest investment banks.

While Lehman’s bond business has traditionally been its biggest revenue stream, Fuld has steered the bank into more profitable businesses globally, such as advising on mergers and acquisitions.

Shares of the New York-based investment bank rose 38 cents, or 0.5%, to $76.06 on Tuesday.