Jamie Dimon greatly admires Warren Buffett but he’s not following Buffett’s lead as far as his large holding in
JPMorgan
Chase stock.
The 67-year-old Dimon, the longtime CEO of JPMorgan Chase (ticker: JPM) said today in a filing with the Securities and Exchange Commission that he and his family plan to sell a portion of their holdings “for financial diversification and tax-planning purposes” starting in 2024.
Dimon, the CEO since 2006, and his family hold about 8.6 million shares worth $1.2 billion and plan to sell one million shares. This will be the first sale of stock during his tenure at the country’s top bank. Bloomberg has put Dimon’s net worth at about $2 billion.
While Dimon is planning to sell some of his holdings,
Berkshire Hathaway
CEO Buffett, 93, has never sold a share of his Berkshire stake, although Buffett has given away more than half of it as part of a philanthropic program that started in 2006.
Evidently aware of the potential signaling effect of such a stock sale intention, Dimon said in the filing that he “continues to believe the company’s prospects are very strong and his stake in the company will remain very significant.”
Nonetheless, JPMorgan shares have fallen 2.9% to $136.53 at 10:36 a.m.
Buffett likes having all his eggs in one basket with 99% of his wealth in Berkshire stock now worth over $110 billion. His unwillingness to sell a single share since gaining control of Berkshire in 1965 also has sent a reassuring message to Berkshire holders.
Dimon, the country’s top banker, evidently feels differently. In addition to his $1 billion-plus stake in JP Morgan, Dimon has unvested performance share units relating to 561,793 shares and stock appreciation rights relating to 1.5 million shares. Assuming his health stays good, Dimon is expected to remain CEO into 2026 when a chunk of his stock compensation package vests and he could remain chairman past 2026, the bank has indicated in a proxy filing.
“The reason given is for diversification and tax planning, which seems to make sense. Nonetheless, the question could be ‘what’s changed?’” wrote
Wells Fargo
banking analyst Mike Mayo in a client note Friday.
“This is the first stock sale that he will make, and comes after his bearish comments that include the possibility of interest rates increasing to 7%, and an ‘uninvestible’ banking sector given the burden of new proposed Basel 3 capital rules. The timing of his first sale with these comments got our attention,” Mayo wrote.
Under Dimon’s leadership, JP Morgan stock has outperformed the overall market and financial stocks generally. During the past 10 years, the stock has returned more than 13% annually, against 12% for the
S&P 500,
8% for rival
Bank of America
(BAC), and 4% for the
KBW Nasdaq Bank index.
Not many big banks have topped the
S&P 500.
JP Morgan stock has crushed that of Bank of America in the past year, gaining 16% against a 25% drop in Bank of America. JP Morgan has a market capitalization of over $400 billion, about double that of Bank of America.
Under Dimon, JP Morgan has built the country’s best banking franchise with high returns, a strong balance sheet, and a deep management team.
Write to Andrew Bary at andrew.bary@barrons.com
Read the full article here