Barron's thinks JPMorgan (JPM) is due for some feisty returns after scooping up Bear Stearns and WaMu on the cheap.
"When you look at who's got the best earnings power in 2010 or 2011, relative to the share price, JPMorgan stacks up very well," T. Rowe Price's Jason Polun says. Shares are down just 10% since December, compared with a 40% loss in SPDR KBW Bank ETF (KBE).
CEO Jamie Dimon's acquisition of Bear Stearns in March for $10/share gives JPMorgan instant exposure to highly-coveted hedge-fund clients. His subsequent purchase of WaMu for $1.9B from the FDIC gives it a long-desired presence in California and Florida. "They are busy capturing market share," portfolio manager Anton Schultz says. "People view them as the safest of the safe."
With its WaMu acquisition, JPMorgan moves to the #1 spot in deposits with almost $1T in accounts - viewed as perhaps the safest and least costly source of funding for a bank. The government's $25B cash injection will allow it to either boost its lending, make another strategic acquisition, or both.
Schultz says EPS - estimated at $3 in 2009 - could hit $5 in 2010 if the economy firms. If its P/E multiple can move back to a historic norm of 12, shares ($41) would rise to $60 - a 50% gain.
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- Avery Goodman wants to know if JPMorgan's recent results were juiced after the FASB recently allowed banks to return to "mark to fantasy" accounting. "Although commercial banks, unlike investment banks, could always hide investment losses, by categorizing certain losing bets as 'not for sale,' when acquiring a company, like WaMu, they were previously required by the accounting rules to write down all the losses to market value." No more.
- JPMorgan was in the news this weekend. It launched an ambitious plan to renegotiate 400,000 mortgages worth $70B in the hopes of saving homeowners from foreclosure. The move suggests banks may be better off with mass modifications rather than foreclosures and/or case-by-case negotiations.
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This article has 5 comments:
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SugarDaddy
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26 Comments
Nov 02 03:37 PMJPM's present derivative exposure is still grand enough to bring down our entire system and no one apparently gives a hoot.
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Ames Tiedeman
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784 Comments
My Website
Nov 02 03:46 PM-
Philly Jim
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125 Comments
Nov 02 05:01 PM-
User 290350
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1 Comment
Nov 02 07:46 PMOctober 27, 2008
Contact: Michael Rozenfeld
Tel: + 1 512-809-8556
E-mail: Mike@WamuRape.org
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Investors Demand Hearing, Investigation & Reversal of Washington Mutual Seizure
Houston, TX (MMD Newswire) October 27, 2008 -- Shareholders of Washington Mutual are demanding an investigation of the Office of Thrift Supervision's (OTS) confiscation of the Washington Mutual bank and their aiding and abetting of JP Morgan's fraud in wiping out its shareholders last month. After losing their lifetime savings and retirement investments, they have banded together to request an investigation into the possibility of wrongdoing, misconduct, conspiracy, and corruption by government regulators, namely the OTS and FDIC, who unlawfully helped JP Morgan steal Washington Mutual from its shareholders. The seizing of a solvent and well-capitalized bank is unheard of in American history and probably will be spoken of for generations to come unless this outrage is immediately addressed and remediated.
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Lockstep Investing
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49 Comments
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Nov 03 02:10 PMDon't touch this stock.