shalab Posted November 22, 2011 Share Posted November 22, 2011 I have no position in this at the moment but the company is trading close to tangible book value of $30/share. The dividend yield is good around 3.3%. The companies reach widened after it got paid for taking WaMu (negative goodwill) and got to strip all the valuable assets while keeping the useless liabilities with the holding company. The company has been aggressively expanding its deposit base. I got paid $175 for opening a checking and savings account with them. If I keep a minimum balance of $2000, I dont get assessed any fees. This was a good 8.75% yield for the minimum period of six months. No wonder their deposits have grown by 22% over a year, well above the norm for competing banks. Also, the company is expanding opening more branches and hiring more people to man the extra branches it is opening up. Link to comment Share on other sites More sharing options...
DCG Posted November 23, 2011 Share Posted November 23, 2011 It's definitely cheap. I've been keeping an eye in it recently too. One thing unclear is how long Jamie Dimon is going to stick around. Link to comment Share on other sites More sharing options...
FCharlie Posted May 12, 2012 Share Posted May 12, 2012 JP Morgan yesterday reports in it's 10Q they have surprise trading losses of $2 billion in their CIO business. This does not mean JPM will report a quarterly loss, but this unit has a loss. Overall, JPM should still report a multi-billion profit this quarter. We don't know what the final impact will be ( this could be $1 billion worse by the end of the year according to management, or this could also end up being offset by trading gains as well.... $1 billion of gains will be taken with the $2 billion loss).... Because we don't know the final impact, I'm ignoring 2012 earnings completely. My only assumptions for 2012 will be that JPM continues to earn a large net income, and JPM repurchases a large amount of shares at tangible book value with that net income. Jamie Dimon, in his annual letter to shareholders this year plainly stated that once the mortgage and housing situation returns to normal, JPM will be earning $23-$24 billion annually. By the time housing is back to normal, JPM should also have already attained 9.5% Basel III capital levels and would be, according to Dimon, "... generating extreme amounts of excess capital." Dimon also clearly says that we can "assume that we are a buyer in size around tangible book value." If we refer back to 2011, JPM was a small buyer of their stock earlier in the year, and when things got really bad in August 2011, JPM exhausted their entire buyback in just a handful of weeks as the stock fell to tangible book value. Here's their share repurchase activity (From 10Q's) June 2011, repurchased 27,726,054 @ $41.52 July 2011, repurchased 16,842,480 @ $40.59 Aug 2011, repurchased 82,777,077 @ $36.54 Sept 2011, repurchased 17,660,599 @ $33.64 At this point, JPM exhausted it's buyback and waited for Fed approval to buy more. So, on the conference call yesterday, Jamie Dimon said that JPM can be in the market buying stock as early as today and that this event does not impact their ability to buy. We should logically assume JPM will be a buyer of up to 7.7% of their shares RIGHT HERE. If we think about $20 billion of net income next year, with 7.7% fewer shares to divide by, we're talking about $5.71/share of EPS next year. If we think about the potential $23-$24 billion of income in a few years Jamie Dimon talks about, we're talking almost $7.00/share of EPS going forward. Even higher if shares can decline even further. When in life are you offered an opportunity to buy the best bank in the industry at liquidation value? When in life are you offered an opportunity to buy the best bank in the industry at six times next years EPS and five times EPS a couple of years from now? A 17%-20% earnings yield is being offered right here for the king of all banks. I have no idea whether or not we go lower from here. Honestly, I don't care. This is a keeper, and the longer it stays down, the better the long-term owners will be in the end. Link to comment Share on other sites More sharing options...
redskin Posted May 12, 2012 Share Posted May 12, 2012 I agree completely. Some shareholders may not realize it, but they are benefiting greatly from these lower prices. Link to comment Share on other sites More sharing options...
A_Hamilton Posted May 12, 2012 Share Posted May 12, 2012 Note in the Q the company also said it spent $1.3 billion to acquire 42 million shares and warrants in April. They had been using TARP warrant repurchases as a cheap (and effective) way to reduce diluted shares out. Now below $42.42 strike they are antidilutive again... Link to comment Share on other sites More sharing options...
Uccmal Posted May 12, 2012 Share Posted May 12, 2012 Agree here as well. Put nearly 900 shares in my RRSP - same as 401 k for Americans. The market can be insanely stupid at times. Jpm buying in 100 m shares and warrants will negate the losses that just happened. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 12, 2012 Share Posted May 12, 2012 When in life are you offered an opportunity to buy the best bank in the industry at liquidation value? You had to ask, so... 2008 2009 2010 2011 2012 2013??? 2014??? ... Link to comment Share on other sites More sharing options...
alertmeipp Posted May 12, 2012 Share Posted May 12, 2012 First, u got AIG way below book, now JPM. JPM was the biggest beneficiary in the crisis. They got BS for a few bucks - Wamu for free. Picking up deposits here and there. How many bank CEO can talk like Dimon in the CC when craps like this happen?? The risk is not about the trade, it's the reputation damage which will take time to repair. AT the mean time, the buyback will keep working for the shareholders. Link to comment Share on other sites More sharing options...
FCharlie Posted May 12, 2012 Share Posted May 12, 2012 When in life are you offered an opportunity to buy the best bank in the industry at liquidation value? You had to ask, so... 2008 2009 2010 2011 2012 2013??? 2014??? ... Very good Eric. Thanks. I need someone to perhaps keep my excitement in check. I think the excitement stems from the reality that JPM was restricted from buying back stock when the stock was in the $28, $29 range not long ago. When JPM finally got approval for $15 billion more of buybacks the stock was up to $45. Seeing JPM tumbling back to TBV excites me, but thank you for your comment. Link to comment Share on other sites More sharing options...
alertmeipp Posted May 12, 2012 Share Posted May 12, 2012 we have to ask if JPM is selling at liq value.. what it means to our stocks. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted May 12, 2012 Share Posted May 12, 2012 When in life are you offered an opportunity to buy the best bank in the industry at liquidation value? You had to ask, so... 2008 2009 2010 2011 2012 2013??? 2014??? ... Very good Eric. Thanks. I need someone to perhaps keep my excitement in check. I think the excitement stems from the reality that JPM was restricted from buying back stock when the stock was in the $28, $29 range not long ago. When JPM finally got approval for $15 billion more of buybacks the stock was up to $45. Seeing JPM tumbling back to TBV excites me, but thank you for your comment. You are right, it looks like a very good deal. We have all these people sitting in cash, worried about a contraction in S&P500 profit margins, yet here is this excellent company at less than 10x P/E and operating in a low-margin environment (banking margins are squeezed by low net interest margin). Link to comment Share on other sites More sharing options...
treasurehunt Posted May 12, 2012 Share Posted May 12, 2012 Agree here as well. Put nearly 900 shares in my RRSP - same as 401 k for Americans. The market can be insanely stupid at times. Jpm buying in 100 m shares and warrants will negate the losses that just happened. I bought a couple of thousand JPM warrants yesterday. Had to sell some undervalued Berkshire to do it, but I think this will turn out to be a good trade. The piling on by JPM critics has been impressive to watch though. Everything from "Dimon should resign" to "Break up big banks" to "Put the hammer down on prop trading." It might take a while for the dust to settle. Link to comment Share on other sites More sharing options...
tombgrt Posted May 13, 2012 Share Posted May 13, 2012 This goes to show that most of the time we don't have to wait long for new opportunities. Is it me or are the warrants a lot cheaper here than the stock if one expects reasonably higher earnings in a few years? Hard not to see the common trading over $70 by the end of 2018, which would probably be about the point where the warrants give an equal return if we also take in account the dividend. Link to comment Share on other sites More sharing options...
racemize Posted May 13, 2012 Share Posted May 13, 2012 I've actually got the break over at 58 dollars without any adjustment at current prices. Link to comment Share on other sites More sharing options...
onyx1 Posted May 13, 2012 Share Posted May 13, 2012 Dimon says $23 billion net income in a normalized environment. Based on $2.3 trillion in assets, this works out to be 1.0% ROA. Is 1.0% realistic? Conservative or aggressive? I don't have a crystal ball, but looking at history on the attached chart, it seems like 1.0% for sustained period is an aggressive assumption for JPM. Even in more normalized environments JPM couldn't keep above 1.0% for more than a few years. Compare this to BAC, for example, before they saddled themselves with CFC and other garbage. Berkowitz assumes a 1.0% normalized ROA for BAC, and the chart supports this as realistic and maybe even conservative. 1.0% for JPM, on the other hand, looks aggressive and unsustainable. Link to comment Share on other sites More sharing options...
Shane Posted May 13, 2012 Share Posted May 13, 2012 I'm not one who is very knowledgeable about JPM, however, I am curious why they had such low ROA in the early 2000s? It seems a 1% ROA is achievable if they are close in this environment. Link to comment Share on other sites More sharing options...
ExpectedValue Posted May 13, 2012 Share Posted May 13, 2012 I'm not one who is very knowledgeable about JPM, however, I am curious why they had such low ROA in the early 2000s? It seems a 1% ROA is achievable if they are close in this environment. One thing to take into account is that JPM changed a bit in the early 2000s. The big one was Jamie Dimon coming aboard in '04 when they merged with Bank One. Link to comment Share on other sites More sharing options...
PlanMaestro Posted May 13, 2012 Share Posted May 13, 2012 One thing to take into account is that JPM changed a bit in the early 2000s. The big one was Jamie Dimon coming aboard in '04 when they merged with Bank One. http://features.blogs.fortune.cnn.com/2012/05/13/jamie-dimon-jpmorgan/ http://www.nytimes.com/2010/12/05/magazine/05Dimon-t.html?_r=2& http://www.nytimes.com/2010/12/05/magazine/05Dimon-t.html?_r=3&hpw=&pagewanted=all http://www.economist.com/node/8585870?story_id=8585870&fsrc=RSS http://www.portfolio.com/views/blogs/market-movers/2008/09/03/how-jamie-dimon-manages-risk http://money.cnn.com/2008/08/29/news/companies/tully_dimon.fortune/ http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/ http://money.cnn.com/2006/03/22/magazines/fortune/dimon_fortune_040306/index.htm http://www.syr.edu/news/articles/2010/jamie-dimon-commencement-remarks-05-10.html “People say I focus on little things about how we allocate expenses. It is not a little thing. At a lot of companies, expense allocation is political, not economic. That means your numbers are not honest.” - Dimon If he had not become political in his new role as spokesman for the industry ... Link to comment Share on other sites More sharing options...
ShahKhezri Posted May 13, 2012 Share Posted May 13, 2012 This isn't going to help with JPM, but I think if you want to understand Dimon, reading "tearing Down the walls" is a must. jPM And wells are different machines. Link to comment Share on other sites More sharing options...
mankap Posted May 13, 2012 Share Posted May 13, 2012 I think 1% ROA looks a stretch to me .I will not bet on 1% ROA. Value line is also projecting 0.85% ROA in 2014-16 timeframe. To me 0.85% Looks more feasible with all the regulatory and economic headwinds that JPM is facing. Even with 0.85% ROA , you are looking at EPS of $6 in 2-3 years timeframe. Link to comment Share on other sites More sharing options...
dcollon Posted May 14, 2012 Share Posted May 14, 2012 Interviews with Jamie Dimon on Meet the Press. Below is one, but there are more if you look on left hand side of website. http://www.msnbc.msn.com/id/3032608/vp/47403788#47403788 Link to comment Share on other sites More sharing options...
lessthaniv Posted May 14, 2012 Share Posted May 14, 2012 This one may get worse before it's gets better. http://www.bloomberg.com/video/92597859/ Link to comment Share on other sites More sharing options...
Grenville Posted May 14, 2012 Share Posted May 14, 2012 This one may get worse before it's gets better. http://www.bloomberg.com/video/92597859/ Any sources on where to get quotes on the CDX IG index? All I've found is the markit website. Does IB have a ticker for it or bloomberg? Link to comment Share on other sites More sharing options...
Viking Posted May 15, 2012 Share Posted May 15, 2012 This looks to me to be a one time issue. Yes, further losses are likely in the coming quarter(s). Bottom line is JPM is making a lot of money. If housing in the US is bottoming (including prices) then US banks, including JPM will become even more profitable. Time to ride (once again) on Buffett's coat tails. From covestreetcapital.com notes from shareholder meeting this year: Question 25: AS- After hearing that Buffett bought shares of JP Morgan (JPM), a shareholder wanted to know how Buffett makes different share purchases for his account versus for BRK. Buffett: He likes WFC more than JPM. But, since BRK buys WFC, he can’t buy WFC. So, he bought JPM as a second choice. Without any question, his best ideas are all held by BRK. Munger: Basically, diversification is not something he has any interest in, aside from the diversification within BRK. He likes to buy and hold business and thinks it has worked well over time. So, we should not care about Warren’s personal investments. If that is the worst problem this questioner has in his life, he has a great life. Buffett: He likes JPM fine but he knows WFC better and thinks it is easier to understand. BRK bought WFC last quarter, last year and during a lot of years. Even if he wasn’t managing BRK he would have money with WFC and JPM too. Link to comment Share on other sites More sharing options...
Mephistopheles Posted May 15, 2012 Share Posted May 15, 2012 Weird because he does own WFC in his personal portfolio. Link to comment Share on other sites More sharing options...
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