JPMorgan Chase: Whale Sale Winner
NEW YORK (TheStreet) -- JPMorgan Chase (JPM) was the winner among the largest U.S. financial names on Wednesday, with shares rising 3% to close at $36.45.
According to several reports citing unnamed sources, JPMorgan has sold off the bulk of the trading positions in its Chief Investment Office that caused an estimated $2 billion in trading losses, announced by CEO James Dimon on May 10. A call to JPMorgan Chase seeking comment on the reports was not immediately returned.
The broad indexes ended mixed, after the Federal Reserve Open Market Committee released its monthly statement, saying that U.S. employment growth was slowing, and that household spending "appears to be rising at a somewhat slower pace than earlier in the year."
The committee directed its trading desk to extend its program of purchasing U.S Treasury securities with maturities of six years to 30 years, while simultaneously selling Treasuries with maturities of roughly three years or less, in an effort to lower long-term rates. The central bank's current $400 billion "Operation Twist" ends this month, and will be followed by s $267 billion program during the second half of the year.
The KBW Bank Index (I:BKX) rose slightly to close at 45.55, with the 24 index components evenly split between winners and losers.
JPMorgan Chase's shares have now returned 11% year-to-date, after a 20% decline during 2011. The shares are down 11% since closing at $40.74 on May 10, before Dimon disclosed the estimated $2 billion in hedge trading losses.
The shares trade just above their reported March 31 tangible book value of $34.91, and for less than seven times the consensus 2013 earnings estimate of $5.32 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $4.36.
Following the media reports that JPMorgan Chase had "sold off 65 70% of the synthetic credit position" that led to the trading losses, Wells Fargo analyst Matthew Burnell said on Wednesday that his firm viewed "progress towards exiting this portfolio positively and would expect the stock to outperform based on signs of progress towards resolving this issue, which has adversely impacted share price performance recent weeks."