Seeking Alpha

KBW: JPMorgan worth 30% more in pieces

  • While the possibility of breaking up JPM is quite low, there exists substantial upside for investors should it occur, says KBW's Chris Mutascio. The businesses - traditional banking, asset management, and private equity - are together worth $255.7B, he estimates, versus the current $197B market cap.
  • Getting back to reality, Mutascio turns his focus on the ever-increasing scope of lawsuits and investigations facing the bank. While the costs from these are potentially "high and uncertain," the bank can "easily earn through them."
  • The investigatory toll on JPMorgan is seen in the stock's underperformance against a broader bank index (KBE) of late, but rather than buying other banks on the hope short-term rates (and net interest margins) will rise, why not buy JPM shares at a discount and wait for the litigation storm to pass, says Mutascio.
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