jpm down 7 percent in two days

[wescobrk]

Bac and c are down big as well in premarket.

I haven't had a chance to read jpm.

I tried to buy some wfc at the last 30 seconds of trading yesterday but it didnt fill. Wfc is up a tad this morning.

Citigroup is now about 20 percent discount to tbv

[vinod1]

Citigroup is now about 20 percent discount to tbv

 

I think TBV is a bit misleading in Citigroup's case as nearly 30% of TBV is made up of DTA's. The DTA's would be utilized over the next 10-20 years in Citigroup's case, since profits are generated in different jurisdictions compared to where DTA's are located. So if you take PV of these DTA's they should be 30 cents to the dollar. If you make this adjustment, it is trading at about TBV.

 

Not saying Citigroup is not attractive, just that TBV would give you a misleading picture. Better I think to look at cash earnings.

 

Vinod

[Uccmal]

I am in there like a bad habit.  JPMs earnings down a whopping 19% - yawn.  WFc earnings up a bit on lending.

 

Curiously BAc should be up a bit next week on the lending side as it is most similar to WFC.

 

Bought WFC leaps, JPM leaps, and rejigged my BAc leaps to lower strike prices.  Sold all my BAC 2016 22's at a loss, some 20's.  Replaced with 15 and 17s.  All before 9:45 this morning. Whew!

[meiroy]

 

Hopefully JPM crashes and burn so I could make a new 40% position and wouldn't have to even take a look at shittybank.

[vinod1]

I am in there like a bad habit.  JPMs earnings down a whopping 19% - yawn.  WFc earnings up a bit on lending.

 

Curiously BAc should be up a bit next week on the lending side as it is most similar to WFC.

 

Bought WFC leaps, JPM leaps, and rejigged my BAc leaps to lower strike prices.  Sold all my BAC 2016 22's at a loss, some 20's.  Replaced with 15 and 17s.  All before 9:45 this morning. Whew!

 

Al,

 

Which strike JPM LEAPS have you bought?

 

Thanks

 

Vinod

[racemize]

I think the JPM warrants are cheap as well.

[vinod1]

I think the JPM warrants are cheap as well.

 

Agreed. I bought them this morning.

 

Vinod

[txlaw]

Me too.

[yadayada]

looked really cheap at 14$, but not at close to 20$? Strike price is 42$ right?

 

If they grow their earnings 7% a year over the next 4 years, and this thing would be valued at 12x earnings then you get a 20-23% return on the warrants.

 

if they grow 9% a year you gain roughly 30% annually over those 4 years.

 

With 9% and a 12x multiple in 4 years at 14$ you would make 40% annually with these things. Should have been faster.

 

Just thinking out loud here :) .

[racemize]

looked really cheap at 14$, but not at close to 20$? Strike price is 42$ right?

 

If they grow their earnings 7% a year over the next 4 years, and this thing would be valued at 12x earnings then you get a 20-23% return on the warrants.

 

if they grow 9% a year you gain roughly 30% annually over those 4 years.

 

With 9% and a 12x multiple in 4 years at 14$ you would make 40% annually with these things. Should have been faster.

 

Just thinking out loud here :) .

 

Just comparing the annualized rate of growth needed for the common stock to appreciate for the warrants to do better than the common with dividends reinvested.  Earlier in the year it was only 3%, now it is 4.67%.  In my view, if it compounds book value anywhere close to what it has in the past (which is significantly more than the 4.67% hurdle), then the returns are pretty decent.

[wescobrk]

I think TBV is a bit misleading in Citigroup's case as nearly 30% of TBV is made up of DTA's. The DTA's would be utilized over the next 10-20 years in Citigroup's case, since profits are generated in different jurisdictions compared to where DTA's are located. So if you take PV of these DTA's they should be 30 cents to the dollar. If you make this adjustment, it is trading at about TBV.

 

Not saying Citigroup is not attractive, just that TBV would give you a misleading picture. Better I think to look at cash earnings.

 

Vinod

 

Good point, thanks.

Citigroup is trading 8.2, bac 9.8 and jpm 8.6 2015 earnings using yahoo finance estimates of roughly 26 analysts.

 

 

[Uccmal]

I am in there like a bad habit.  JPMs earnings down a whopping 19% - yawn.  WFc earnings up a bit on lending.

 

Curiously BAc should be up a bit next week on the lending side as it is most similar to WFC.

 

Bought WFC leaps, JPM leaps, and rejigged my BAc leaps to lower strike prices.  Sold all my BAC 2016 22's at a loss, some 20's.  Replaced with 15 and 17s.  All before 9:45 this morning. Whew!

 

Al,

 

Which strike JPM LEAPS have you bought?

 

Thanks

 

Vinod

 

57.50 & 60.00    I am sort of operating with an interim target of 72 by the end of 2015 - low ball

[vinod1]

I am in there like a bad habit.  JPMs earnings down a whopping 19% - yawn.  WFc earnings up a bit on lending.

 

Curiously BAc should be up a bit next week on the lending side as it is most similar to WFC.

 

Bought WFC leaps, JPM leaps, and rejigged my BAc leaps to lower strike prices.  Sold all my BAC 2016 22's at a loss, some 20's.  Replaced with 15 and 17s.  All before 9:45 this morning. Whew!

 

Al,

 

Which strike JPM LEAPS have you bought?

 

Thanks

 

Vinod

 

57.50 & 60.00    I am sort of operating with an interim target of 72 by the end of 2015 - low ball

 

Thank you! I started looking at JPM LEAPS and thinking of $55 strikes. You seem to prefer ones that are slightly out of money.

 

Vinod