Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  JPMorgan Chase       

JPMORGAN CHASE
Mes dernières consult.
Most popular
  Report  
SummaryChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets

JP Morgan Selloff Seen Spurring Flow Of Funds From Banks

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/18/2012 | 02:08pm CET

(This article was originally published Thursday.)

--Investors put their money elsewhere rather than buying shares in another bank

--Lack of investor interest in shifting funds from J.P. Morgan to Wells Fargo and U.S. Bancorp is in part because bank stock investors own those stocks already

 
   By Matthias Rieker 
   Of  
 

Investors have drained almost $26 billion in market capitalization from J.P. Morgan Chase & Co. (>> JPMorgan Chase & Co.) since the bank announced a surprise $2 billion trading loss a week ago--and most of it likely has left the bank sector altogether.

E. Keith Wirtz, the president and chief investment officer of Fifth Third Asset Management, said the money leaving banks is "is either going away from stocks, or they are going into categories like staples, utilities, health care, those more defensive sectors." Utilities and health-care stocks are roughly flat over the last five trading days, and consumer discretionary fell considerably less than financials. Biotechnology stocks are up.

Bank stocks have struggled to find a firm footing after the financial meltdown. But the sector has been among the best performing this year. J.P. Morgan was part of the rally, in part because it was among the first to restore its dividend, with an increase last year and another one earlier this year.

Its "premature" dividend hike "added fuel to the fire" of financial stocks, wrote Andrew Wilkinson, the chief economic strategist of Miller Tabak & Co. LLC, in a research note Thursday. "Financials outperformed discretionary stocks by 7% during the rally. All that has been given back as the rally turned to dust."

J.P. Morgan, along with Wells Fargo & Co. (WFC) and U.S. Bancorp (>> U.S. Bancorp), has long been the go-to stock for fund managers who want to invest comfortably in bank stocks.

All three had come through the financial crisis in strong shape, their risk management held, their top executives are well regarded, and their growth prospects are promising.

But shares of Wells Fargo and U.S. Bancorp, though not down nearly as much, seemed to absorb little of the money that left with the more than 15% decline of J.P. Morgan's stock. Shares closed at $33.93 Thursday, off 4.31% or $1.53. Shares are down $6.81 in five days.

Investors put their money elsewhere rather than buying shares in another bank, no matter how stable the bank appears.

The lack of investor interest in shifting funds from J.P. Morgan to Wells Fargo and U.S. Bancorp is in part because most bank stock investors own those stocks already.

"They own all three. J.P. Morgan, Wells Fargo, U.S. Bancorp, those are the three big pillars" of the banking industry, said Byron Brand Snider, president pf West Oak Capital LLC, a J.P. Morgan shareholder. And "when you take a step beyond those names, then you have worries about balance sheets that aren't as big and strong.

"If I were to lose confidence in owning a name like J.P. Morgan, it probably would be money flowing out of the sector," he said. He has held on to his J.P. Morgan shares.

But other investors, particularly generalist fund managers selling J.P. Morgan "are pulling their money out" of the banking sector, said Brian Bertonazzi, the head of sales and trading at Sandler O'Neill + Partners LP. Thomas Michaud, the chief executive of KBW Inc., an investment bank specializing on the financial services industry, said, "Investors see what happens...and move on."

J.P. Morgan's reputation took a massive hit when the bank disclosed that it lost about $2 billion already this quarter on trades to hedge the bank's credit risk. The full extent of the damage from the flawed hedging strategy won't be known until the trades are unwound, which could take until the end of the year, Chief Executive James Dimon told investors last week.

Michaud said J.P. Morgan's issues shouldn't tarnish the entire industry, but they do in part because J.P. Morgan is such a big part of major bank indexes and the big drop is pulling down the sector's perceived performance, regardless of how risky the individual banks are.

That adds to concerns that banks in general are too leveraged and, given the slow economic recovery and uncertainty about how regulatory changes will impact banks' profitability, overall not a good investment.

Still, some analysts and investors believe sellers of J.P. Morgan stock are overreacting. Jill Cuniff, the president of Edge Asset Management, said her firm underweights banks, particularly the large banks.

"We don't own Citigroup (>> Citigroup Inc.), we don't own Bank of America (>> Bank of America Corp), we are not confident in their business models," she said. Wells Fargo and J.P. Morgan, however, were exceptions, and "we still feel confident" in J.P. Morgan.

For Wirtz, the J.P. Morgan dip is "presenting a buying opportunity.

"My worry is that J.P. Morgan overreacts and overcompensate on risk control," he said. "They need to take risk; I want them to earn money."

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; [email protected]

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA 1.07% 32.03 Delayed Quote.7.35%
CITIGROUP 1.06% 77.08 Delayed Quote.2.50%
US BANCORP 2.25% 55.49 Delayed Quote.1.29%
WELLS FARGO 0.61% 59.17 Delayed Quote.-3.07%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on JPMORGAN CHASE
02/22JPMORGAN CHASE & CO. : Declares Quarterly Coupon on Alerian MLP Index ETN
BU
02/22JP MORGAN CHASE MPANY : JPMorgan says website glitch affecting client accounts f..
RE
02/22EU presidency seeks to ease new rules on foreign banks
RE
02/22WARREN BUFFETT : Buffett letter may tout optimism as broader market worries ebb
RE
02/22Buffett letter may tout optimism as broader market worries ebb
RE
02/22BERKSHIRE HATHAWAY : Another view - Alexa, could health care ever be fixed?
AQ
02/22Barclays shaves Staley's pay as whistleblower cloud hangs over CEO
RE
02/22JP MORGAN CHASE MPANY : Financial Sense Advisors Inc. Raises Holdings in Consume..
AQ
02/22JP MORGAN CHASE MPANY : JPMorgan To Build New State-of-the-art HQ At Park Avenue..
AQ
02/21JP MORGAN CHASE MPANY : Jamie Dimon Will Raze 270 Park In Order To Build Somethi..
AQ
More news
News from SeekingAlpha
2017Market Failure - The Forgotten Source Of Crisis 
201745 $100+ Billion Companies In The S&P 500 
2017Tracking Glenn Greenberg's Brave Warrior Advisors Portfolio - Q2 2017 Update 
2017Picking Stocks Fantasy Football Style - Cramer's Mad Money (8/15/17) 
2017Foregone Conclusions Become Well-Known Facts 
Financials ($)
Sales 2018 108 B
EBIT 2018 45 744 M
Net income 2018 29 920 M
Debt 2018 -
Yield 2018 2,15%
P/E ratio 2018 13,13
P/E ratio 2019 11,89
Capi. / Sales 2018 3,69x
Capi. / Sales 2019 3,51x
Capitalization 400 B
Chart JPMORGAN CHASE
Duration : Period :
JPMorgan Chase Technical Analysis Chart | 4-Traders
Income Statement Evolution
Consensus
 
Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 118 $
Spread / Average Target 2,2%
EPS Revisions
Managers
NameTitle
James Dimon Chairman & Chief Executive Officer
Gordon A. Smith Co-President & Co-Chief Operating Officer
Daniel E. Pinto Co-President & Co-Chief Operating Officer
Marianne Lake Chief Financial Officer & Executive Vice President
Lori A. Beer Chief Information Officer
Sector and Competitors
1st jan.Capitalization (M$)
JPMORGAN CHASE5.05%399 678
JP MORGAN CHASE & COMPANY7.71%399 678
INDUSTRIAL AND COMMERCIAL BANK OF CHINA12.90%371 486
BANK OF AMERICA7.96%327 856
WELLS FARGO-1.55%294 126
CHINA CONSTRUCTION BANK CORPORATION14.32%291 311