Tags: Bove | JPMorgan | Shares | loss

Bove: Buy JPMorgan Shares, Rumors of Trouble Are a ‘Farce'

Tuesday, 22 May 2012 01:44 PM

Forget the $2 billion botched trade at JPMorgan.

The bank is one of the best out there, with top management, and is a good buy right now, says Dick Bove, a banking analyst at Rochdale Securities.

"There are only five companies in the United States that made more money than JPMorgan last year, so to assume that this staggeringly successful, profitable company might now be in trouble is a farce," Bove tells CNBC’s "Worldwide Exchange."

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

Lawmakers and regulators are probing the botched trade to conclude if any wrongdoing took place, among other factors.

Look less at headlines and more at the bank's financials, Bove recommends.

"The company will increase its dividend 20 percent this year, its earnings will be higher this year, and up 15 to 20 percent next year, so I think we’ve done the overselling by more than a little bit," Bove says.

JPMorgan has put a share buyback program on hold although such a move was not due to the trading loss.

"The fact that the company is not buying back stock does not hurt the ability of the company to make money, but enhances it. Stock buyback is a way to manipulate earnings per share, not a way to get more profit from a business you’re operating," Bove says.

Fitch Ratings downgraded JPMorgan on news of the trading loss, pointing out, however, the bank can handle the loss.

"Fitch views the size of loss as manageable. That said, the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity. It also raises questions regarding JPM's risk appetite, risk management framework, practices and oversight; all key credit factors," Fitch said in a statement on news of the loss.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown



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Tuesday, 22 May 2012 01:44 PM
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