Should JPMorgan (NYSE: JPM ) CEO Jamie Dimon move on? He’s been lauded as the best banker on Wall Street -- and is one of the few financial executives to have emerged stronger from the financial crisis.
But the recent London Whale "hedging" debacle has put Dimon in the news for the wrong reasons. I asked Eddy Elfenbein, who writes about stocks at Crossing Wall Street and has JPMorgan as one of the 20 stocks on his "buy list," for his perspective on JPMorgan’s recent struggles.
Elfenbein, named by CNNMoney as "the best buy-and-hold blogger" on the Web, made clear that he thinks Dimon should give up his role as CEO for the sake of the bank. We spoke last week in Washington, D.C. -- before Dimon’s Senate testimony -- and you can watch our conversation here (run time: 2:35), or read the transcript below:
Brian Richards: On your list of 2012 recommended stocks on your website, Crossing Wall Street, let me just ask you about a few of those stocks. One of them is JPMorgan.
Eddy Elfenbein: Ah, do you have to ask me about this?
Richards: So, JPMorgan has also been in the news lately, but for the wrong reasons.
Elfenbein: Yes it has. Yes it has.
Richards: Has your view of JPMorgan changed at all in the last four weeks?
Elfenbein: OK, well this is one of these … Well, it's a good lesson for investors because it's one of these companies you love to hate and you hate to love. [laughs] We have to say it's a very good company. They never lost any money during the financial crisis. They always stayed above water and they're making a good profit. They had this recent scandal which cost them money.
In the large scheme of things it's not a huge amount of money, but this is what investors pay attention to. They're being punished far more than the damage really was. A good investor takes notice over those sorts of things.
But that's the key about picking up a good company -- you're almost always going to get something that's a new toy that's damaged and dinged up in some way. And you have to ask is this damage, is it transitory or is it something that's deeply embedded in the company? With JP Morgan I think it's pretty clear that these are transitory issues.
Just looking at the dividends alone which they just increased, I mean you're getting a good return and they can pay a lot, lot more. I think one of the problems they're having now is Mr. Dimon, who [laughs] … he's a loud-mouth [laughs]. He's a highly competent loud-mouth, but he is a loud-mouth and from my point of view I think it would be time, I think the best interest of the company would be served if he were to move on. Or if he could stay on as chairman of the board, but I think it's too much of a drag on the stock, but it could be $40-$45 stock again, no problem.