Analyst predicts minor break up of JPMorgan Chase
In the aftermath of the financial crisis, we've heard various suggestions that would break up the likes of Bank of America, Citigroup and even Goldman Sachs.
So perhaps it is unsurprising that someone has now raised the idea of breaking up JPMorgan Chase. The call to break up the company may seem oddly timed, as the stock has generally outperformed its harder-hit big bank peers. But at the same time, the bank has largely been outperformed by the broad market. And even after this year's 15 percent gain, the stock is about 2 percent below the price at the end of 2004.
As noted by Bloomberg, the esteemed Mike Mayo, the maverick analyst at CLSA, wrote to clients, saying "At what point does the conglomerate discount become so great that it encourages the company to take action? The stock seems undervalued, but the question is how and when this value gets realized?"
Mayo went on to suggest that perhaps CEO Jamie Dimon should sell its asset- management and processing units, which accounted for 18 percent of 2011 revenue, and use proceeds for share buybacks.
To be sure, this doesn't constitute a massive break-up, which at this point is far off the table. Still, management at other banks will likely hear similar suggestions if the stock malaise continues. That said, the sector is off to a hot start, one that we can only hope endures.
- here's the article