Shorting the Markets; Long JPMorgan: Doug Kass' Views

NEW YORK (Real MoneyPros) -- Doug Kass shares his views every day on RealMoneyPros. Click here for a real-time look at his insights and musings.

 


As the Rubber Band Gets Stretched

Posted at 10:13 AM EDT on Friday, May 15, 2015

The "Bad News Is Good News" feature of the equity market is getting too entrenched and accepted in investors' and traders' mindsets.

I raised my short exposure further this morning based on the ever-widening chasm between financial asset prices (higher) and the real economy (disappointing.)

The chasm has gotten so large that I am prepared to take some more short-term pain for long-term gain.

Position: Short SPY, QQQ
 
Must Read: Expect September Fed Rate Hike, U.S. Economic Slowdown Is Over


JPM Still a Best Idea

Posted at 7:50 AM EDT on Thursday, May 14, 2015

Yesterday, I spent an hour updating my analysis of JPMorgan (JPM).

JPMorgan's shares have more doubled the return of the large bank stock index over the last three months.

Nevertheless, I feel strongly that (1) JPM is among the best positioned money center banks, (2) the bank has the best scale of any major bank and (3) consensus earnings estimates are a bit too low for 2015 and 2016 (with the source of the potential beat in investment banking, strength in the commercial bank and in real estate),

JPMorgan still trades at a modest (5%) valuation discount to its peers.

I expect JPMorgan's shares to trade in the low- to mid- $70s by the same time next year.

The shares were placed on my Best Ideas list on March 26, 2015 at $59.05.

JPM remains on my Best Ideas list.

 

At the time of publication, Kass and/or his funds were short SPY and QQQ and long SPY, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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