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JP Morgan (JPM)
Old 06-27-2020, 01:31 PM   #1
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JP Morgan (JPM)

Anybody buying this? I've been watching the stock for the last couple of months and to me it looks really attractive at $92.40

PE: 10.45
Yield: 3.89%
52 Week High: $141.10

I know the banks are getting hammered with every hint of bad news and with zero percent interest rates coupled with the recent stress test results on banks, it does come with some risk. But a 10.45 PE? It did have a bad quarter last quarter but everything points to COVAD

Daily Trader DDM analysis gives a fair value of $109.54 (May 24, 2020)
Morningstar gave it a fair value estimate of $113 (April 14, 2020)

Any thoughts?
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Old 06-27-2020, 02:28 PM   #2
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We haven't seen anything yet as far as how things play out because of the virus. There are going to be lots of small business bankruptcies and defaulted loans, a fair number of larger corporate bankruptcies, lots of personal bankruptcies, and lots of mortgages going in to foreclosure. The banks have exposure all over the place.

Now, on top of all that, for the past few years, all of the banks have been skimping on funding their loan loss reserves. Loan loss reserves are an expense which comes directly out of corporate earnings, and so in an effort to inflate quarterly earnings, most all banks have not sufficiently funded their reserves, which means when the loans go sour, they are going to have an even greater impact.

It's also been indicated that banks will be capped on the amount of dividends they can pay. Look for some dividend cuts to be coming over the next couple quarters. Even if it looks like current earnings/cash flow will cover the current dividend, that makes no difference - regulators will dictate what can be paid out.

If you will be holding for the long term, there's probably little risk in beginning to acquire shares at this time. However, it is certainly not the time to go all-in. Slowly accumulate shares to build your position over time. I think we can safely say that the price today is not the lowest we're going to see.
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Old 06-27-2020, 03:02 PM   #3
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Didn’t JPM already say that they might have to cut the dividend? I thought I heard that yesterday.
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Old 06-27-2020, 03:30 PM   #4
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Search news for JPM stress test and similar. JPM may be forced (along with other banks) to cut their dividends as part of regulation.

I think it will drop to at least $80.

https://www.marketwatch.com/story/th...=mw_quote_news
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Old 06-27-2020, 03:35 PM   #5
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You said any thoughts.

My thoughts are in Sept/Oct/Nov of 2020 it will be well below 90.
But I'm not betting on it, and if I was it'd be with a concentrated banking sector ETF spreading both the risk and the reward involved.
I'd consider that risk spreading strategy because I watched CIT quietly go into Chap11 in 08/09, and my common shares there went poof!

Did you hear about Citi bank going bankrupt back then?
The USA news media avoided reporting on it.
There was C, there was CIT, then there was its other investment/banking/insurance/re-insurance/trading/etc. arms it handily restructured with w/a Chap11 reorganization including dumping all common shares first*.

IIRC CIT/C went 1-3bucks, no one wanted it.

I'd advise against it.
Google banking sector ETFs, there are many.
Your current thinking is flawed.
Good Luck & Best wishes though.....
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Old 06-27-2020, 03:41 PM   #6
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Quote:
Originally Posted by SeattleRocks View Post
Anybody buying this? I've been watching the stock for the last couple of months and to me it looks really attractive at $92.40

PE: 10.45
Yield: 3.89%
52 Week High: $141.10
JPM does look like a pretty good value at $92, so instead of just buying it outright, maybe sell some $91 July puts to earn a little extra cash? I've been doing this with certain beaten down airline stocks (e.g. DAL) and have found it to be a good strategy for generating a bit of extra income each month.
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Old 06-27-2020, 04:29 PM   #7
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To me there is no rush to buy banks. I think mid July (when there is hand-wringing over whether Congress will extend the enhanced unemployment) and into the fall may be better times to add to positions, in my view.
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Old 06-27-2020, 04:57 PM   #8
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Great feedback everybody. Thanks! I am going to keep my powder dry and see what comes of the dividend cuts and the Sep/Oct/Nov timeframe. Going to keep my eye on this stock, because of all the banks, I like this one a lot.

Would be great to get it at $92. Would be much better to get it below $80!
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Old 06-28-2020, 03:50 PM   #9
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Bank stocks move up 3 months before what the market projects as the end of a recession. JPM is not a buy here. It will likely test the March 2020 lows.
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Old 06-28-2020, 03:55 PM   #10
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Originally Posted by bolt View Post
You said any thoughts.

My thoughts are in Sept/Oct/Nov of 2020 it will be well below 90.
But I'm not betting on it, and if I was it'd be with a concentrated banking sector ETF spreading both the risk and the reward involved.
I'd consider that risk spreading strategy because I watched CIT quietly go into Chap11 in 08/09, and my common shares there went poof!

Did you hear about Citi bank going bankrupt back then?
The USA news media avoided reporting on it.
There was C, there was CIT, then there was its other investment/banking/insurance/re-insurance/trading/etc. arms it handily restructured with w/a Chap11 reorganization including dumping all common shares first*.

IIRC CIT/C went 1-3bucks, no one wanted it.

I'd advise against it.
Google banking sector ETFs, there are many.
Your current thinking is flawed.
Good Luck & Best wishes though.....
Citibank is one of many zombie banks. After 2008/9 it did a 10 for 1 reverse stock split so in reality it went from $52 to $1 and after 12 years it's trading at a split adjusted $4.99.
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Old 06-28-2020, 04:33 PM   #11
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Quote:
Originally Posted by SeattleRocks View Post
Anybody buying this? I've been watching the stock for the last couple of months and to me it looks really attractive at $92.40

PE: 10.45
Yield: 3.89%
52 Week High: $141.10

I know the banks are getting hammered with every hint of bad news and with zero percent interest rates coupled with the recent stress test results on banks, it does come with some risk. But a 10.45 PE? It did have a bad quarter last quarter but everything points to COVAD

Daily Trader DDM analysis gives a fair value of $109.54 (May 24, 2020)
Morningstar gave it a fair value estimate of $113 (April 14, 2020)

Any thoughts?

Banks are a black box to me. Even if I was an expert on bank stocks I still wouldn't feel like I could trust their numbers. Its too easy for their employees to get caught up in reckless boondoggles that their CEOs don't even know about. How many times have we seen some obscure area of a bank blow up and the CEO was caught by surprise? It even happened to JPM not too long ago. I seem to remember them getting hit with a $1+ billion surprise a few years ago.
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Old 06-28-2020, 08:05 PM   #12
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The retirement plan for one member of this forum was to have a portfolio of conservative bank stocks. He had to go back to work after 2007 when his bank stocks were crushed.
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Old 06-28-2020, 08:07 PM   #13
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Originally Posted by Free To Canoe View Post
The retirement plan for one member of this forum was to have a portfolio of conservative bank stocks. He had to go back to work after 2007 when his bank stocks were crushed.
Oh man, I remember a poster that had (inherited?) a huge amount of Bank of America stock at that time and was tearing his hair out trying to decide whether to sell.
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Old 06-28-2020, 08:40 PM   #14
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JPM was the only big bank that did not have to take a bailout... it did because of regulator pressure...


It did have to pay billions in penalties back then, but the sad part IMO is that it was due to entities that it purchased because the gvmt wanted them to do so and had indemnified them... but when it came time to pay the penalty the other part of the gvmt insisted that it come from JPM... still mad at that as I have a lot of JPM...


As for purchasing, the comments above are legit and it might drop to $80... but I do think it is a long term buy... the question would be how much of a buy and hold person are you...
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Old 06-28-2020, 09:46 PM   #15
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JPM is massively exposed to personal credit card debt.....very profitable until people stop paying.

Average card holder with debt has ~ 10,000 debt and pays ~20% annual interest.
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Old 06-28-2020, 11:03 PM   #16
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measured move to 106.87 before heading down to 84.70.
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Old 06-29-2020, 02:39 PM   #17
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Quote:
Originally Posted by Freedom56 View Post
Citibank is one of many zombie banks. After 2008/9 it did a 10 for 1 reverse stock split so in reality it went from $52 to $1 and after 12 years it's trading at a split adjusted $4.99.
Thank for that info!

That may in fact have bearing on it. I was not monitoring it daily.
However I do remember buying it near 1.62-1.84 rings a bell, and receiving an actual post card* a yr. or so later saying it went belly up. Chapt11 reorg./ shares are now worthless.

Discarding custodianal shenanigans, VG was the broker .

Good Luck & Best wishes......
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Old 07-02-2020, 01:25 PM   #18
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Started a position in the March golden giveaway at $85 and change. Like Jamie Dimonís common sense take on a lot of things so would likely keep building it out in further pullbacks, same with CINF.

Long JPM and CINF
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