Oct 27 (Portal) – JPMorgan Chase (JPM.N) Chief Executive Jamie Dimon will sell some of his shares in the largest U.S. bank next year for the first time in nearly 18 years at the helm, the bank said on Friday with The stock lost more than 3%.
Billionaire Dimon will sell the shares “for financial diversification and tax planning purposes” and “continues to believe that the company’s prospects are very good,” the bank said in a filing. According to the filings, Dimon and his family plan to sell 1 million of their 8.6 million shares. That’s a tiny percentage of JPMorgan’s outstanding shares, whose market capitalization exceeds $409 billion, according to LSEG data.
Dimon, one of the most prominent voices in American business, steered JPMorgan through the 2008 financial crisis. He was also instrumental in the rescue of First Republic Bank that year, helping to stem the turmoil caused by the collapse of several regional banks.
The stock sale “makes perfect sense” because Dimon’s wealth is so concentrated in his company’s shares, said Octavio Marenzi, chief executive of Opimas, a management consultant specializing in capital markets. Still, investors may view such moves as a bad sign.
“He has become more negative and quite pessimistic in his rhetoric,” Marenzi said. “It doesn’t look good, but they’re massaging the look as best they can.”
Dimon warned in October that “this could be the most dangerous time the world has seen in decades.” Still, the bank reported a 35% jump in profits.
According to Forbes, the 67-year-old bank boss has an estimated net worth of $1.7 billion.
The sale is not related to the succession at the top, said a company spokesman. Dimon has no current plans to sell additional shares but may consider doing so in the future, the spokesman added.
In May, the CEO announced that he could leave in three and a half years.
Several executives who were seen as potential successors to lead JPMorgan have left the company to run other companies as Dimon stayed longer than expected.
JPMorgan Chase CEO Jamie Dimon speaks to reporters as he leaves the U.S. Capitol after an unannounced meeting with Schumer, the U.S. Senate Majority Leader, that reportedly discussed the possibility of the U.S. defaulting on its debt, in front of the US Capitol in Washington, USA, on May 17th. 2023. Portal/Evelyn Hockstein/File Photo acquire license rights
The stock sale would raise nearly $141 million, with a remaining stake of about $1.07 billion based on Thursday’s closing price. It will represent less than 10% of Dimon’s holdings, which also include non-vesting performance shares and stock appreciation rights.
Shares of JPMorgan fell more than 3%, falling with rivals Bank of America (BAC.N), Citigroup (CN) and Wells Fargo (WFC.N).
“Usually CEOs or insiders selling stocks raise concerns, but not in this case as the bank’s balance sheet remains in a strong position,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which holds JPMorgan shares .
“We’re not concerned about the timing or the motive behind it,” Mulberry said, adding that Zacks would no longer be selling shares following the announcement.
The move was not seen as an expression of Dimon’s opinion of the stock price “unless he is engaging in opportunistic selling behavior by, among other things, targeting specific prices,” said Ben Silverman, director of research at VerityData, an investment research firm that tracks conducts insider activity.
“This is a reminder that as the CEO nears retirement, he has 3.5 years left on his 5-year plan as CEO,” Wells Fargo analyst Mike Mayo said in a note Friday.
Succession plans for the Wall Street giants have come into focus after James Gorman announced plans to hand over the reins at Morgan Stanley and Peter Orszag became CEO at Lazard earlier this month.
“There is not enough evidence that Dimon will stop being CEO any time soon, but this sale underscores the succession discussions as it is his first sale since taking the helm,” said Dave Ellison, portfolio manager at Hennessy Funds, which holds shares of JPMorgan shares.
So far this year, JPMorgan shares have risen 1.4%, outperforming the S&P 500 Banks Index (.SPXBK), which has fallen 18%.
The news could trigger short-term weakness in the stock, but “it doesn’t change our thinking,” said Scott Siefers, an analyst at Piper Sandler who has an overweight rating on the bank. JPMorgan has a very strong capital, liquidity and risk profile, Siefers wrote in a note.
Reporting by Niket Nishant in Bengaluru and Lananh Nguyen and Nupur Anand in New York; Edited by Shilpi Majumdar, Shinjini Ganguli, Mike Harrison and Jonathan Oatis
Our standards: The Trust Principles.
Acquire license rights, opens new tab