March 17 (Bloomberg) -- Joseph Lewis, the billionaire investor who bought 9.4 percent of Bear Stearns Cos. last year, lost $1.13 billion on his stake after the firm agreed to sell itself to JPMorgan Chase & Co. yesterday for $2 a share.

Lewis, the New York-based firm's second-largest holder, paid an average of about $107 apiece for 11 million shares, according to a filing submitted last year to the U.S. Securities and Exchange Commission. Bear's biggest investor at year-end was money manager Barrow Hanley Mewhinney & Strauss Inc., whose 9.7 percent holding has fallen by $958 million.

New York-based JPMorgan, the third-largest U.S. bank, said yesterday it will pay about $240 million for Bear, which was crippled last week after clients pulled money and investors balked at trading with the firm because of losses on its subprime-mortgage holdings. Bear's market value was $13.6 billion at Nov. 30, the end of its fiscal year.

``This was done in the market's best interests,'' said David Hendler, an analyst at CreditSights Inc., a financial- research firm in New York. ``Unfortunately Bear Stearns shareholders are at the short end of the stick and they only got this token payment.''

Bear Stearns stock closed at $4.81 today on New York Stock Exchange composite trading. It closed at $30 on Friday.

Lewis, a former currencies trader who was born in an apartment above a pub in London's East End, declined to comment through a spokesman. The loss is almost half his $2.5 billion fortune, as estimated by Forbes magazine in its 2007 survey.

Barrow Hanley president James Barrow didn't immediately return a call yesterday to the firm's Dallas headquarters.

Morgan Stanley Funds

Mutual funds run by investment bank Morgan Stanley were the third-largest Bear Stearns holder with a 5.4 percent stake and may have lost about $529 million since Dec. 31. Morgan Stanley said in a statement that its stake in Bear Stearns represented 0.10 percent of its mutual-fund assets as of Friday. It didn't disclose total fund assets.

James Cayne, Bear's former chief executive officer and fourth-largest holder with a 4.9 percent stake, saw the value of his holding drop by $487 million.

Bear's fifth-largest shareholder, Baltimore-based Legg Mason Capital Management, a unit of Legg Mason Inc. run by Bill Miller, may be down $477 million.

Messages left at the offices of Cayne and Miller weren't immediately returned.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net.

Last Updated: March 17, 2008 18:38 EDT