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The Thesis
Dimon seized the opportunity of the financial crisis to acquire Bear Stearns and Washington Mutual at distressed prices, dramatically expanding JPMorgan's franchise at a fraction of replacement cost.
The Story
In March 2008, Jamie Dimon's JPMorgan Chase acquired the failing Bear Stearns for $10 per share (initially offered $2 before raising) in a deal backed by the Federal Reserve. Six months later, as the crisis deepened, JPMorgan acquired Washington Mutual — the largest bank failure in US history — from the FDIC for $1.9 billion, gaining $307 billion in assets. Both deals were executed under extreme time pressure and uncertainty.
While the acquisitions came with significant litigation costs and operational challenges, they transformed JPMorgan into the undisputed leader of American banking. Bear Stearns brought a premier prime brokerage franchise. WaMu brought 2,200 branches and a massive deposit base in key markets. Combined, the acquisitions created over $50 billion in value for JPMorgan shareholders. Dimon's willingness to act decisively during a panic — and his careful management of JPMorgan's balance sheet in the years prior that gave him the strength to do so — stands as a masterclass in crisis leadership.
Key Insight
Crises favor the prepared — manage your balance sheet conservatively during good times so you have the strength to make transformative acquisitions when others are failing.
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See how Glen Bradford applies these principles to his own investing. Long Fannie Mae & Freddie Mac junior preferred — conviction meets patience.