MorningMord 7/23/12: Smoke & Mirrors

by Dan July 23, 2012 9:20 am • Commentary

MorningWord 7/23/12:  Friday after the close, the big breaking news, while we were trying to drop some serious options knowledge on the people during Options Action on CNBC, was that JPM CEO Jamie Dimon bought 500,000 shares of JPM common for the whopping sum of ~$17million last week.

Dimon is certainly a good leader from an optics standpoint, probably a bit more Stormin’ Norman than Nathan Jessup, but he appears happy to have the buck stop with him, and be right up there in the forward position with his troops.  He puts his money where his plain talkin’ mouth is, the same mouth that has run circles around the financial press, Capitol Hill, Wall Street Analysts (except Mike Mayo) and investors alike during this “Whale Crisis”.  JPM’s PR mavens have been patiently waiting to pull the “Insider Buy” page out of their bank crisis playbook, and with Q2 results out of the way and the blackout period over, why not get in there and try to put the “Dimon” floor in the stock.    

But come on, how about his sale of JPM Preferred shares for ~$13.5million in the same filing that causes the net addition to his holdings of only about $4million, which when you add this to his existing holdings of approximately ~$190million worth of stock, he really only added about 2%, and when you further consider that the company will commence a massive share buy-back as soon as the Feds let them, it is not like he is diving into the abyss.   So for Dimon to take a good chunk of his 2011 compensation of  $23million, from a year that saw JPM’s revenues decline by 5% and the stock decline about 21%, and plow it into the stock probably makes a little sense, optically.

I know that was a little bit of a rant, and obviously he is adding some risk to his holdings, and I don’t mean to be too snarky, but this is just another example of the “anointed ones” getting a pass, and getting more credit than he likely deserves for doing what is expected of him.  My sense is that he has likely saved some ammo to buy more near the early June lows, if and when the Euro banking crisis hits our shores in a meaningful way, without a buy-back in place, Jamie, and maybe Buffet are the last line of defense before we see the stock in the $20s for the first time since late last year.