J.&W. Seligman & Co. unloaded the last of its J.P. Morgan Chase holdings last Monday, selling $6.63 million of the 5.25% notes of '07 (A1/A+) at a spread of 164 basis points over Treasuries. The bonds had widened to 189 basis points over the curve by last Friday morning. "We're probably out for good," says Paul Pertusi, portfolio manager of $1.75 billion in taxable fixed-income at the New York-based asset manager. He cites concerns about the bank's overall strategy and execution.
David Hendler, analyst at Creditsights, says the bank needs to make the kind of wholesale changes seen at other financial institutions caught up in the technology-related excesses of the 1990's. As an example, he cites Toronto-Dominion Bank, where Michael Mueller recently stepped down as head of global investment banking after 18 years at the firm. "At different companies that have misfired on their strategy you see top executives taking responsibility, allowing fresh leadership to come in and rebuild the model. J.P. Morgan is laying low, holding on to dreams that have not panned out," he says.