JP Morgan is now in Warren Buffett’s Portfolio

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JP Morgan is now in Warren Buffett’s Portfolio

Cong Minh Nguyen

16/11/2018


Warren Buffet only invests in what he himself is able to understand. For years, JP Morgan was associated with derivatives that Mr Buffet regarded as “financial weapons of mass destruction”, with the “London whale” fiasco of 2012, even regulators were so wary that they placed a secret restriction on the big bank’s branch expansion [1]. However, things changed with time. Regulations imposed in 2010 by the Democrats had forced the industry to reduce risk trading, further develop upon consumer banking and asset management. JP Morgan was able to successfully restructure it’s investment banking sector in time, to ensure that there would be continued sustainable growth. The company is now pumping out $30bn a year in net income, surpassing giants like Apple to be in the top 10 world’s earners. Warren Buffet can now have sigh of relief as he can confidently say that JP Morgan’s past of reckless banking in 2008 are behind them, and now he is ready to purchase a $4bn stake into the firm [2]. The choice is reasonable as shown but indeed quite late, Buffet once rejected the opportunity 5 years ago when the share price was half of its current value [3]. JP Morgan have the real potential for continued sustainable and rapid growth.

 

Bibliography:

[1] Warren Buffett/Goldman Sachs: relative
values | Financial Times. [online] Available at:
https://www.ft.com/content/1b09590e-e8c4-11e8-a34c-663b3f553b35 [Accessed 16
Nov. 2018].

[2] Warren Buffett’s Berkshire Hathaway takes new stake in
JPMorgan | Financial Times. [online] Available at:
https://www.ft.com/content/b85a698a-e853-11e8-8a85-04b8afea6ea3 [Accessed 16
Nov. 2018].

[3]  A simpler JPMorgan forces its way into Warren Buffett’s portfolio | Financial
Times. [online] Available at: https://www.ft.com/content/9aeb33b6-e998-11e8-a34c-663b3f553b35
[Accessed 16 Nov. 2018].

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