Courtesy of Benzinga.
As an act of contrition, the highly visible CEO of JPMorgan Chase (NYSE: JPM) Jamie Dimon has purchased 500,000 common shares to restore investor’s confidence.
Dimon paid an average price of $34.22 back on July 19th and 20th for the $17,107,533 outlay after selling 12,142 shares of Series I Preferred stock at $1,110 a share, garnering $13,477,620. In actuality, the purchase only cost Dimon $3.6 million.
In the wake of the London Whale trading scandal the face of the franchise, Dimon needed to show leadership to soothe investor’s ire.
Last week the CEO disclosed that the bank’s Chief Investment Office losses from the heinous gamble had mushroomed to $5.8 billion by the end of the second quarter, and could in fact soar to $7 billion.
Following the botched episode, questions arose to JPMorgan’s risk management methodology. However, charismatic Dimon had the Senate Banking Committee fawning over him in his recent testimony concerning the London Whale trade.
To further lessen shareholder anxiety, Dimon is embarking on a bus tour throughout the Midwest on a meet and greet. Dimon insisted that he and the bank were completely upfront with investors concerning trading losses. “We disclosed what we knew when we knew it.” Dimon told the lawmaker, an honest approach that has won over both regulators and shareholders.
Richard Bove of Rochdale Securities told Tom Keene of Bloomberg Radio, “To assume that this one-time loss or this one-time event should change all theories or concepts about JPMorgan or about big banks would be a terrible mistake.”
Despite all the support, macro economics and the threat of a European contagion have put U.S. banking stocks under pressure. JPMorgan Chase has been trading at a discount to its reported book value.
In comparison to its peers like Bank of America, (NYSE: BAC), Citigroup, (NYSE: C) and Wells Fargo (NYSE: WFC), JPM stands out as paying the highest dividend at 3.4 percent. Wells Fargo yields a 2.4 percent dividend and both Citigroup and Bank of America are at 1 percent.
Dimon believes that JPMorgan is the most attractive investment, cheaper than Wells Fargo and with far less risk exposure than Citigroup or Bank of America.
