David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

Monthly Digest – May 2012

May 16th, 2012

The London Whale
After the market close on May 10th, JP Morgan announced that it had suffered an unexpected $2 billion loss on a trading position in credit default swaps (CDS).  The trades seem to have originated from the firm’s London office, with a trader named Bruno Michel Iksil (quickly dubbed “The London Whale”).  The news sent the stock down over 9% and was an embarrassment for JP Morgan CEO Jamie Dimon, who had earned a reputation as one of the more astute risk managers on Wall Street during the 2008 financial crisis. JP Morgan has long had one of the larger derivatives businesses among the big banks.  In fact, it was the opacity of this derivatives business which ultimately made us uncomfortable holding the stock, leading us to sell it in November 2011.

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