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Large pension funds, money managers hold sizable stakes in JP Morgan Chase
Me thinks some of the pension funds have all manner of things to worry about. I'm sure these funds hold huge stakes in JPM, because it's Jamie Dimon we're talking about here, right? lol. As I've said previously, it's remarkable to me how quickly many were willing to put trust in many of these financial companies again, which it was very clear they hadn't learned anything from the 2008 crisis.
"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities. But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief. “If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said."
You have pension funds operating on expectations of x and they're finding it difficult to even make y, and not only are they finding it difficult to make y, many are entangled in all manner of complex derivatives in an attempt to meet even less than their desired goals.
But let's not forget that Buffett/Berkshire continues to invest in Banks including even more recent money added to Wells Fargo. Berkshire as well as numerous quality value funds such as ARTGX team have been buying Bank of New York Mellon.
The likes of the Pimco Dividend team and Yacktman team as well as Buffett/Berkshire have also been investing in US Bancorp.
If we look at US Bancorp and see the following....they look to be in good shape....
- Decent yield in the 2.5% range - 2011 Earnings increased by 47% - Positive earnings growth past couple of years - Ontrack to be able to sustain earnings growth - Been able to repurchase some of their shares - Strong balance sheet and has a strong capital position - their Tier 1 common equity ratio exceeds the minimum required - Low payout ratio of only 22% + Strong capital position means that they are in great shape to not only continue their dividend payouts but to also add some growth to it as well
Sorry Maurice- what you're describing is anything but "socialism". You have, unwittingly I expect, provided an excellent description of capitalism, at least as we know it.
I just saw the movie Atlas Shrugged: Part I (2011 movie adapted from Ayn Rand's Book). I never read the book nor am i a proponent of her ideology. but i enjoyed the movie (thought provoking). Mo, I think you would purring like a cat if you picked up this dvd at your local collective (aka public library). Or available thru the amazon link at MFO, if you don't like using the collective.
I also thought the old adaptation of Fountainhead was excellent, if you never saw that.
I think OJ has a valid point too (as we know it(me and OJ)) - (OJ and I)!
Reply to @Kenster1_GlobalValue: I'll be happy to not really mind what Berkshire is doing, as while Buffett has an outstanding history, he's turned into the definition of crony and one has to question whether a number of Berkshire's companies have become dated or are too dependent on the US. "Buy American" is wonderful, but unfortunately, the reality is that companies are going to go where the growth is. P & G moving their cosmetics business to Singapore and a discussion of airlines on CNBC just now regarding diversifying away from the US and/or adding routes to other countries.
There will be winners and losers in the financials and funds who try to pick one or two winners, fine (Yackman is a little over 5% financials; not exactly betting the farm). USB may very well be one of them, although there has been much discussion of what's lurking at Wells Fargo.
The other issue is trust and clarity, and those who wander (or try to proclaim these things "great values") in the JPM's of the world after execs are dishonest about activities and call things a "tempest in a teacup", then proceed to announce a $2B loss (which could quite honestly be much larger by the time it's all said and done) and are engaging in black box-style derivative trades that could very easily get out of their control and understanding are welcome to do so. I've said many times that many of these companies have clearly not learned anything from what happened in 2008, and now you have AIG once again investing in subprime mortgages, betting that "this time will be different."
Will there be one or more winners? Sure. However, I would consider many of the large financial names "values" about as soon as I'll call Sears (which is down how much since its short-squeeze highs?) a great retailer. (read: probably never.)
Any winners in the financial sector face regulatory issues (if we ever actually regulate anything in this country) and other headwinds, probably for years. As for BNY Mellon, I wonder how their lawsuit accusing them of defrauding pension funds went/is going, which was investigated by Madoff whistleblower Harry Markopolos (http://www.ft.com/cms/s/0/5a05a27e-d324-11e0-9ba8-00144feab49a.html)
But, maybe they are values. I mean, if they're going to all get bailed out again if we have another crisis, you have an investment that will always be propped up by taxpayers.
Additionally, as for the Amex, MC's and Visas of the world, I have a rather positive view on them due largely to the increasing move towards mobile payments and their move towards what Visa in discussed in ads as "financial inclusion" with the push towards mobile in EM, where there are a tremendous amount of people who do not have access to financial services, but have a mobile phone.
After watching their slick "Currency of Progress" ads, it becomes abundantly clear what Visa sees and why they're pushing for mobile payments - and by extension MC and Amex.
Visa's ad for "financial inclusion" in Rwanda on Youtube, which looks like it was directed by Tony Scott.
First off, who you going to believe your Comrade Me or (Roger Ebert, Imdb, or other raters. Second - I don't go by ratings Third - You're right, some people let their ideologies affect their thoughts on a movie or a book - hence the lack of middle of the road ratings. Fourth - one more movie recommendation - for you - "In time" . I thought it was unique and thought provoking, as well as a good yarn. Don't miss this movie. And don't let Justin Timberlake distract you from watching it.
"In Time" - from the NYT ( a snippet) Set in a near or far future .... around Los Angeles the movie imagines a world in which everyone stops aging at 25. On that birthday a glowing green digital clock on everyone’s left forearm starts running, giving them just 365 days to go and then 364, 363, 362. When the days run out, the clock stops for good.
In this futureworld in which time is literally money — everything, including food, shelter and wages, is valued in minutes, hours, years, decades — it’s possible to slow the escaping hourglass sand by buying more time, as the rich do.
(my edit ... also you can trade for it , steal it , and work for it. Seemed like a metaphor if that is the word for our healthcare system).
Unfortunately, I've been spending way to much time programming and fooling around on the computer instead of reading. My biggest reading lull so far. That has got to change soon. I did read “Incognito: The Secret Lives of the Brain by David Eagleman. Thoroughly enjoyable for my brain and well-written I thought.
Reply to @Accipiter: "In Time" was really quite good and probably one of the better movies I've seen in the last couple of years. "Gattaca" also a great movie from the same director.
well that makes 2 recommendations for "In Time". My apologies for hijacking this thread. Saw Gattaca, when it came out. Thx for the reminder, might be time for a second screening.
Reply to @Accipiter: LOL - No problem with your hijacking the thread! Do it all the time myself. Just hope Maurice enjoyed Ken Langone on CNBC this morning - all 3 hours of it - now there's a dyed in the wool conservative for ya. (and a loyal supporter of Jamie Dimon)
Reply to @hank: The other loyal Dimon fan on there the other day was former White House Chief of Staff (and former JPMer) Bill Daley, who couldn't have more wonderful things to say about Dimon. Langone had a few good things to say (some of which were the same good things I thought he said last time he was on), but I thought much of the interview wasn't that interesting and occasionally wandered into BS.
As for CNBC and conservatives, Joe Kernan has become much more "politically irritable", and his more frequent goofing on polar opposite Andrew Ross Sorkin (who really seems to have no ability to volley the one-liners back) has made for some enjoyably awkward moments.
Additionally, anyone ever see the segments where Kernan brought his daughter on after they wrote that right-wing book for kids? You think Langone is conservative? Kernan's daughter made Alex P. Keaton look like a hippie by comparison. The book? "Your Teacher Said What?!: Defending Our Kids from the Liberal Assault on Capitalism"
Interview with Kernan and his daughter:
The problem is not a viewpoint - everyone is entitled to their opinion. The problem is the increasingly divisive nature of politics. There are some real serious issues in this country that need to be addressed imminently and probably years ago, but they haven't by either party. Yet, instead of people focusing on the fact that both parties have failed the populace in many ways, we have people engaging in remarkable hatred because someone else is democratic or republican. I've said it a million times, but it's a way to divide and distract while nothing gets done by politicians from either party. I said it yesterday - neither side is looking out for the majority, despite statements to the contrary, and yet people think their side is looking out for them. They're not.
As for JPM, the lack of understanding by some as to why massive derivatives bets going South is causing upset only a few years after one of the worst financial crises in history - well, those who don't learn from history are doomed to repeat it. I think it's an issue of trust, and BAC trading at less than half off book value to me is stating that investors don't trust the book. Either BAC is a tremendous value or it's trading at these levels because the book is BS.
One of the best moments of the interview with Jim Rogers on CNBC the other day was his discussion of betting against JPM - "they have someone in charge of commodities who doesn't know what they're doing." That would be Blythe Masters, who is credited with coming up with credit default swaps and who acted like everything at JPM was "on the up and up" about a month or so prior to this on CNBC.
"JPMorgan Chase's fixed-income revenue fell almost 28 percent to $3.6 billion in the second quarter, down from $5.5 billion in the first quarter, and down from $4.9 billion for the same period last year. JPMorgan blamed an interest rate squeeze and bad results in the credit markets and the commodities markets.
There were no details of its significant loss from unwise, gigantic, wrong-way wartime coal bets. The bank took a short position so enormous that it was oversized relative to the global coal market, and second quarter losses reportedly were in the hundreds of millions of dollars. " -----
Look at the graph on this page http://www.ritholtz.com/blog/2012/05/10-mid-week-pm-reads-14/ - you have BAC trading at less than half book and the less complex (well, comparatively) US Bancorp trading at nearly twice book. Fifth Third is trading at about book.
What's trading at less than book? The TBTF'ers - JPM, Citi, BAC, Morgan and Goldman. Wells, despite the issues that have been discussed with them (Wachovia and otherwise), is trading mildly above book.
I'm not sure the negative of having the trading/investment arms of these companies being spun-off as separate companies. The bank would be boring, offer a dividend and be "utility-like", while the spin-off would be more aggressive, offer less (if any) dividend and be more volatile. The parent bank could take a stake in the spin-off to whatever degree they see fit. Obviously it's not that simple, I know, but I actually think there could actually be some appeal to investors who may be interested in solely focusing on the investment side, and some who may be solely interested in a new, more dull/consistent, utility-like banking side.
"When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. **But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress**, fueling faster deterioration in the underlying credit market positions held by the bank."
Reply to @scott: Joe Kernan and Rick Santelli seems to be repeat offenders on their political jibes that add no value at all. Personally, they might be better fit somewhere else.
As for JPM, I think while the loss is big for us, it is a small enough loss to digest and will probably not going to have a huge effect on the bottom line. I think the decline in the stock is making it an interesting stock to look for buying opportunity.
Comments
"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.
But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.
“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said."
http://news.medill.northwestern.edu/chicago/news.aspx?id=166746
http://www.zerohedge.com/article/look-zerohedge-vs-illinois-teachers-retirement-fund-spat-we-still-have-some-unanswered-quest
Things haven't gotten any better since then.
http://www.suntimes.com/news/politics/11938275-418/teachers-pension-fund-paid-a-whopping-13-billion-in-fees-for-what.html
You have pension funds operating on expectations of x and they're finding it difficult to even make y, and not only are they finding it difficult to make y, many are entangled in all manner of complex derivatives in an attempt to meet even less than their desired goals.
Also under the same topic:
http://www.zerohedge.com/news/largest-teacher-pension-fund-underfunding-increases-9-billion-645-billion-only-69-funded
The likes of the Pimco Dividend team and Yacktman team as well as Buffett/Berkshire have also been investing in US Bancorp.
If we look at US Bancorp and see the following....they look to be in good shape....
- Decent yield in the 2.5% range
- 2011 Earnings increased by 47%
- Positive earnings growth past couple of years
- Ontrack to be able to sustain earnings growth
- Been able to repurchase some of their shares
- Strong balance sheet and has a strong capital position - their Tier 1 common equity ratio exceeds the minimum required
- Low payout ratio of only 22% + Strong capital position means that they are in great shape to not only continue their dividend payouts but to also add some growth to it as well
I just saw the movie Atlas Shrugged: Part I (2011 movie adapted from Ayn Rand's Book). I never read the book nor am i a proponent of her ideology. but i enjoyed the movie (thought provoking). Mo, I think you would purring like a cat if you picked up this dvd at your local collective (aka public library). Or available thru the amazon link at MFO, if you don't like using the collective
I also thought the old adaptation of Fountainhead was excellent, if you never saw that.
I think OJ has a valid point too (as we know it(me and OJ)) - (OJ and I)!
There will be winners and losers in the financials and funds who try to pick one or two winners, fine (Yackman is a little over 5% financials; not exactly betting the farm). USB may very well be one of them, although there has been much discussion of what's lurking at Wells Fargo.
The other issue is trust and clarity, and those who wander (or try to proclaim these things "great values") in the JPM's of the world after execs are dishonest about activities and call things a "tempest in a teacup", then proceed to announce a $2B loss (which could quite honestly be much larger by the time it's all said and done) and are engaging in black box-style derivative trades that could very easily get out of their control and understanding are welcome to do so. I've said many times that many of these companies have clearly not learned anything from what happened in 2008, and now you have AIG once again investing in subprime mortgages, betting that "this time will be different."
Will there be one or more winners? Sure. However, I would consider many of the large financial names "values" about as soon as I'll call Sears (which is down how much since its short-squeeze highs?) a great retailer. (read: probably never.)
Any winners in the financial sector face regulatory issues (if we ever actually regulate anything in this country) and other headwinds, probably for years. As for BNY Mellon, I wonder how their lawsuit accusing them of defrauding pension funds went/is going, which was investigated by Madoff whistleblower Harry Markopolos (http://www.ft.com/cms/s/0/5a05a27e-d324-11e0-9ba8-00144feab49a.html)
But, maybe they are values. I mean, if they're going to all get bailed out again if we have another crisis, you have an investment that will always be propped up by taxpayers.
Additionally, as for the Amex, MC's and Visas of the world, I have a rather positive view on them due largely to the increasing move towards mobile payments and their move towards what Visa in discussed in ads as "financial inclusion" with the push towards mobile in EM, where there are a tremendous amount of people who do not have access to financial services, but have a mobile phone.
After watching their slick "Currency of Progress" ads, it becomes abundantly clear what Visa sees and why they're pushing for mobile payments - and by extension MC and Amex.
Visa's ad for "financial inclusion" in Rwanda on Youtube, which looks like it was directed by Tony Scott.
First off, who you going to believe your Comrade Me or (Roger Ebert, Imdb, or other raters
Second - I don't go by ratings
Third - You're right, some people let their ideologies affect their thoughts on a movie or a book - hence the lack of middle of the road ratings.
Fourth - one more movie recommendation - for you - "In time" . I thought it was unique and thought provoking, as well as a good yarn. Don't miss this movie. And don't let Justin Timberlake distract you from watching it.
"In Time" - from the NYT ( a snippet)
Set in a near or far future .... around Los Angeles the movie imagines a world in which everyone stops aging at 25. On that birthday a glowing green digital clock on everyone’s left forearm starts running, giving them just 365 days to go and then 364, 363, 362. When the days run out, the clock stops for good.
In this futureworld in which time is literally money — everything, including food, shelter and wages, is valued in minutes, hours, years, decades — it’s possible to slow the escaping hourglass sand by buying more time, as the rich do.
(my edit ... also you can trade for it , steal it , and work for it. Seemed like a metaphor if that is the word for our healthcare system).
Unfortunately, I've been spending way to much time programming and fooling around on the computer instead of reading. My biggest reading lull so far. That has got to change soon
well that makes 2 recommendations for "In Time". My apologies for hijacking this thread.
Saw Gattaca, when it came out. Thx for the reminder, might be time for a second screening.
Mr Burns would approvingly say to Smithers, "EGGGGSELLLENT"
As for CNBC and conservatives, Joe Kernan has become much more "politically irritable", and his more frequent goofing on polar opposite Andrew Ross Sorkin (who really seems to have no ability to volley the one-liners back) has made for some enjoyably awkward moments.
Additionally, anyone ever see the segments where Kernan brought his daughter on after they wrote that right-wing book for kids? You think Langone is conservative? Kernan's daughter made Alex P. Keaton look like a hippie by comparison. The book? "Your Teacher Said What?!: Defending Our Kids from the Liberal Assault on Capitalism"
Interview with Kernan and his daughter:
The problem is not a viewpoint - everyone is entitled to their opinion. The problem is the increasingly divisive nature of politics. There are some real serious issues in this country that need to be addressed imminently and probably years ago, but they haven't by either party. Yet, instead of people focusing on the fact that both parties have failed the populace in many ways, we have people engaging in remarkable hatred because someone else is democratic or republican. I've said it a million times, but it's a way to divide and distract while nothing gets done by politicians from either party. I said it yesterday - neither side is looking out for the majority, despite statements to the contrary, and yet people think their side is looking out for them. They're not.
As for JPM, the lack of understanding by some as to why massive derivatives bets going South is causing upset only a few years after one of the worst financial crises in history - well, those who don't learn from history are doomed to repeat it. I think it's an issue of trust, and BAC trading at less than half off book value to me is stating that investors don't trust the book. Either BAC is a tremendous value or it's trading at these levels because the book is BS.
One of the best moments of the interview with Jim Rogers on CNBC the other day was his discussion of betting against JPM - "they have someone in charge of commodities who doesn't know what they're doing." That would be Blythe Masters, who is credited with coming up with credit default swaps and who acted like everything at JPM was "on the up and up" about a month or so prior to this on CNBC.
Janet Tavakoli also addresses Masters in this terrific article on Huffpo: http://www.huffingtonpost.com/janet-tavakoli/jamie-dimons-snafu_b_1511844.html
"JPMorgan Chase's fixed-income revenue fell almost 28 percent to $3.6 billion in the second quarter, down from $5.5 billion in the first quarter, and down from $4.9 billion for the same period last year. JPMorgan blamed an interest rate squeeze and bad results in the credit markets and the commodities markets.
There were no details of its significant loss from unwise, gigantic, wrong-way wartime coal bets. The bank took a short position so enormous that it was oversized relative to the global coal market, and second quarter losses reportedly were in the hundreds of millions of dollars. "
-----
Look at the graph on this page http://www.ritholtz.com/blog/2012/05/10-mid-week-pm-reads-14/ - you have BAC trading at less than half book and the less complex (well, comparatively) US Bancorp trading at nearly twice book. Fifth Third is trading at about book.
What's trading at less than book? The TBTF'ers - JPM, Citi, BAC, Morgan and Goldman. Wells, despite the issues that have been discussed with them (Wachovia and otherwise), is trading mildly above book.
I'm not sure the negative of having the trading/investment arms of these companies being spun-off as separate companies. The bank would be boring, offer a dividend and be "utility-like", while the spin-off would be more aggressive, offer less (if any) dividend and be more volatile. The parent bank could take a stake in the spin-off to whatever degree they see fit. Obviously it's not that simple, I know, but I actually think there could actually be some appeal to investors who may be interested in solely focusing on the investment side, and some who may be solely interested in a new, more dull/consistent, utility-like banking side.
JPM - trading loss said to increase 50%: http://dealbook.nytimes.com/2012/05/16/jpmorgans-trading-loss-is-said-to-rise-at-least-50/?hp
"When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. **But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress**, fueling faster deterioration in the underlying credit market positions held by the bank."
As for JPM, I think while the loss is big for us, it is a small enough loss to digest and will probably not going to have a huge effect on the bottom line. I think the decline in the stock is making it an interesting stock to look for buying opportunity.