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October 2012

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Citi finally looks out for shareholders

October 16, 2012 – Comments (3) | RELATED TICKERS: C

By now most have noticed in business news that Vikram Pandit has resigned (along with his lieutenant, Citi COO John Havens) as CEO of Citigroup.  Shareholders should be relieved to receive this news.  I was never a fan of Pandit from the start.  He somehow convinced Citi's board to buyout his Old Lane Partners hedge fund so that he could take the job at Citi back in 2007.  City then took a massive ($200MM-plus) write-down on that investment the very next year.  In the time that Pandit has been at Citi his compensation (approximately $261MM in 5 years, plus another $165MM for his share of Old Lane) has been at or near the top of the global banking industry,but his leadership has produced average to below average results. If anything is missing from this story it's the need for   [more]

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Does Kraft's split present any opportunities?

October 09, 2012 – Comments (0) | RELATED TICKERS: KRFT , MDLZ

Kraft Foods (KFT) recently divided its operations between two new entities:  Kraft Food Group (KRFT) and Mondelez (MDLZ).  This split is comparable to Altria's move a couple of years ago to separate North American operations and international business.  With the split I wondered if either new entity presented a compelling investment opportunity.  I didn't dive too deep and instead chose to apply the Cash Return on Invested Capital (CROIC) metric to both companies.  CROIC is defined as:  Net Income plus Depreciation less Capital Expenditure divided by Total Stockholders' Equity plus Total Liabilities less Current Liabilities, or (NI+Depr-CapEx)/(TSE+TL-CL).  [more]

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