24/7 Wall St. will name its annual CEO of the Year next week. The executive will be picked from a field of ten which we will profile this week.
The CEOs are chosen on the basis of their company’s stock market and financial performances compared with their own industry groups and all large companies traded on US markets. Only firms with market caps of more than $5 billion were considered. 24/7 reviewed revenue growth, operating margins, balance sheets, return on assets, and return on equity
It could be argued that no CEO of a large US financial firm should be viewed as an outstanding manager, but James Dimon of JPMorgan Chase (JPM) has been the exception. Over the last year, the bank’s shares have significantly outperformed Bank of America (BAC), Citigroup, Morgan Stanley (MS), and Goldman Sachs (GS). Dimon has been given credit for voicing concern about the mortgage-backed securities market at least two years ago and cutting his firm’s exposure before that market collapsed. Many analysts believe that he got “deal of the century” prices for taking over Bear Stearns and Washington Mutual. In both cases, Dimon was ruthless about taking out people and eliminating redundant operations. With the WaMu purchase he sharply increased the JPM deposit base.
Dimon has made certain the JPM has an unusually strong balance sheet compared with its peers. This has recently been bolstered by a $25 billion investment from the Treasury and an $11.5 billion common equity sale.
Dimon also has to get points for a brutal honesty. He has made it plain that the fourth quarter and 2009 will be extremely rough for JPM. With an unusually diverse base of businesses and a senior management team which is often mentioned as the best at any large US financial firm, JPM is in an excellent position to take advantage of the recession by having the capacity to buy more assets at unusually favorable prices.
Douglas A. McIntyre