Look, the case of C right now is all about the book value of the company and the reasonable multiple to attach. Back of envelope calculations can start to be made upon some assumptions. The devil you know is much better than the one you don't. It's all about the overall performance of the SIV from here out now as well as the turn around plans from Pandit. 51M of the 49B is subprime. That is minimal, just take that 51M down to 0. Now you have to deal with the rest of the 48.95B. Now the question is how much of that is going to default or deteriorate in quality? That is a big unknown, but it isn't going to go to 0. So take that down to .50 on the $1. Now you have about 25B in assets that are currently performing. So now what is C worth on a book value basis? Well take 150B market cap and reduce it by the adjusted SIV value through rough reverse calculations on current book and shares, and I come out around where the stock is currently trading, a little less (around 28-29 level). So, the street has taken it down to that level and Abu Dhabi stepped in with resources. That wasn't any arbitrary level in which to invest. That was C opening their books to a certain extent and divulging the trash for some cash. Now the big question is about the plans from here out. That is what Pandit addressed a little of. He basically stated that they're going to cut (layoff) and look as divesting assets (spin out/break up). So C right now is trading about 1.20 price to book. I'll take it. They can always cut the dividend to raise cash, but not necessary. They're going to cut the bloat and raise cash through cost cutting. So the question is, do you like C at close to book? It will only trade below book if dividend gets cut, and even then it's not going to stay there long. The home builders are barely trading below their book currently and I don't see too many houses going to get built in the next 3 quarters. It's all about Pandit right now and his plans. Personally I kinda like the guy. Does he have the extensive experience in commercial banking? No, but he does have the investment banking/money management background and that's the growth segments of the business. He also stated he's got experience in the oversees markets and that's where C is best positioned. Just some thoughts over a cup of coffee, but to think C is going significantly lower is a stretch in my opinion. fundamentals indicate otherwise. Good Luck!
powerfade i am not short " C " i am long the rydex inverse s&p 500 which is made up of 1/3 financials. i do hold short anf thats the only stock i'm short. i understand your idea about value investing, thats fine , but why hold C in such financial turmoil ? bgp
To understand more about its overseas expansion one just needs to look at Asia where Citigroup is becoming more and more of a house hold name.
And as the incomes and wealth in that region rise, the AUM that C have as well as net deposits will do so as well. The biggest money is investing in the financials right now, Buffet, Ross, Branson, soverign wealth, etc... I take it they know a little more than I do, but hell even I can see with the current fundementals (even marked down) C is a good investment. Plus, when C gets put atop a major short list and brings its trash back in house off the curb and the market can't take this thing to a new low (at least not yet).... I'd say we're in inning 7 of this ball game, what's going to get interesting now is watching how the other financials do now that C has thrown down the gauntlet concerning their SIV's. Hell put on a pairs trade if you're a little weary, short WM and long C (WM is pure sub-prime, low rent crap). Do you think a new CEO would make a bold move overnight in less than a week of taking the company over if he thought there was a good chance the company couldn't handle this? I'm starting to like this dude, nobody can say he's not a man of action and indecissive. Just what C needs right now! Good Luck!
So C chops 40,000 employees give or take and moves what's worth moving to Dubai.... leaves a shell company here in the US to hang the debt onto.... the new CEO is just an ax man.... I wonder how many candidates turned the job down?? I bet a bunch...
I think C is efficiently priced. I think any stock that is constantly talked about on CNBC and has tons of analysts and talking heads covering it cannot be a particularly good trade. As algorithm hinted at, Buffet, Ross, etc. prob. know more. Even then, they're not gonna make much. They just have too much money to invest elsewhere. I love how a bunch of guys who have never passed the level 1 CFA are trying to act like they know how to value a very complex, diversified financial better than the 100's of analysts covering it. The no-name, undiversified lenders-that's a different story. Talk about inefficiency/easy money.
I agree 100% that there are many wannabes on here talking crap. However, I don't have as much faith in the 'analysts' as you do. Let's face it, the GS or ML 'analysts' are answering to their bosses, who are interested in making money. Do you think that a sell has never been put out on a stock that the bosses wanted to accumulate? Not even saying that this is the case with C, just that i-bank and brokerage analysts have their own vested interests.
maybe so, but hundreds of analysts also missed the biggest credit crisis in the last 80 years.... we'll save the bitching about all this for later.... Fridays last 45 min on the NYSE was the "get me out of whatever" trade and financials took another pounding Maybe C can hold here but more of the books need to be seen in the glare of the sun....