Citigroup announced they're selling another $2 billion in preferred. They followed their last sale of preferred a week or two ago with another sale of common. I wouldn't be surprised if they dump more common out there this time also. They're going to have one hell of a gigantic float if they keep this up. Dilute, dilute, dilute. http://www.thestreet.com/_yahoo/new...ml?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
Dilution is less of a concern when you're pretty sure your stock is worth zero (or at the very least much less than it currently is). If they go bankrupt the jackasses who caused the whole mess get fired. If said jackasses can instead dilute the hell out of the stock and manage to remain solvent, they can hang on to their jobs, give themselves lots of options when it looks like it's going under and profit handsomely if it recovers. If it doesn't at least they tried (and it's not like it's their money going down the drain.)
The interesting part here (for me) is not simply the fact they're trying to raise capital but the ease of getting investors to pour billions upon billions into these financials. It seems many banks and brokers have investors lined up just waiting with billions of dollars to give away. Nuts.
Remember: the stock market doesn't care about banks, bond insurers, mortgage companies, or the economy.
It;s better for current shareholders and Arabs to hole diluted shares than a bailout with tax dollars.
Citi's selling off further today after they announced a huge asset sale. It leaves them pounding the bid on all kinds of crap that's already been devalued. What if they sell or do a lease-back deal on their branches? Not the best real estate market in which to make that switch. Some talking heads were saying it's time to load up on Citi but it's looking more like it needs to marinate in its own poop for a while longer to see how things shake out.