JPMorgan chief Dimon to sell some of his own company stock for first tim

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Executive Officer Jamie Dimon will sell part of his stake in the largest U.S. bank next year for the first time in almost 18 years at the helm, the bank said on Friday, sending the stock down more than 2.5%.


Billionaire Dimon and his family intend to sell 1 million of the 8.6 million shares they own, subject to the terms of a stock trading plan, the bank said in a regulatory filing.

 


The sale would fetch nearly $141 million, with a remaining stake of about $1.07 billion, based on Thursday’s closing price.


It will account for less than 10% of Dimon’s holdings, which also include performance shares that have not vested and stock appreciation rights.

 


Dimon has an estimated net worth of $1.7 billion, according to Forbes. JPMorgan has a market capitalization of more than $409 billion, according to LSEG data.

 


Dimon will sell the stock for “financial diversification and tax-planning purposes,” and he “continues to believe the company’s prospects are very strong,” the bank said in the filing.

 


The sale is not related to leadership succession, a company spokesman said. Dimon is not currently planning to sell more stock, but could consider doing so in the future, the spokesman added.

 


Octavio Marenzi, chief executive of Opimas, a management consultant focused on capital markets, said the action “makes perfect sense” given Dimon’s wealth is so concentrated in his company’s stock. Still, investors can view executives’ share sales as a bad sign.

 


“In his rhetoric, he has become more negative and quite bearish,” Marenzi said. “It doesn’t look good, but they’re massaging the optics as best they can.”

 


Shares of JPMorgan slid more than 2.5%, falling with peers Bank of America, Citigroup and Wells Fargo .

 


“Typically, CEOs or insiders selling stock sparks concern, 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 stock.

 


“We are not concerned on the timing or the motive behind this,” Mulberry said, adding Zacks would not sell any shares after the announcement.

 


Dimon steered JPMorgan through the 2008 financial crisis and orchestrated a rescue deal for First Republic Bank this year after the failure of several regional banks, which fueled industry turmoil.

 


“We don’t view Dimon’s intent to sell as a meaningful valuation view expression … unless he displays opportunistic selling behavior by, among other things, targeting specific prices,” said Ben Silverman, director of research at VerityData, an investment research firm that tracks insider activity.

 


While analysts said they did not view the latest move as part of succession planning, it drew their attention to Dimon’s eventual retirement.

 


“This is a reminder that the CEO is getting closer to retirement, he has 3.5 years left on his 5-year plan as CEO,” Mike Mayo, an analyst at Wells Fargo said in a note on Friday.

 


Dimon’s long tenure atop the bank has been the source of speculation for years, and succession plans of 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 is going to stop being the CEO any time soon but this sale highlights discussions around succession considering it is his first sale since being at the helm,” said Dave Ellison, a portfolio manager at Hennessy Funds which holds JPMorgan stocks.

 


So far this year, JPMorgan shares have risen 2.5%, outperforming the S&P 500 Banks Index, which has declined almost 17%.


The news could trigger some short-term weakness in the stock, but “it does not alter 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.

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