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Five Dollar Flirt and Other Citigroup Notes

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January 22, 2011 – Comments (1) | RELATED TICKERS: C

About nine months ago, Citigroup's (NYSE: C) share price managed to crack through $5 per share, but it wasn't able to hold that lofty level. Recently, the stock broke the $5 mark again and then pulled back after a weak earnings report. Can Citi reclaim a five-handle and keep going?

In this article, I pulled institutional holding stats for Citi and a few of the other members of the formerly bailed out, big bank brigade.  Despite the recent punk earnings report, I think Citi has a good shot at taking out five bucks and continuing up from there.

In addition to my scribbles, there's some good coverage of Citi and big bank prospects here at The Fool.  Morgan Housel did his usual excellent job summarizing Citi's earnings report in Looking Pretty in the Citi, Alex Dumortier concluded This Crisis Is In the Books after reviewing a few earnings reports, and Nick Nejad weighs in on What the Massachusetts Decision Means for the Major Banks.

Some other Citi highlights include:

Citi's board announced a nice pay raise for the CEO bumping his salary from $1 per year to $175 million per year.  That's like 17.5 billion percent.  I doubt even Ben Bernanke can bump prices that fast.  In all seriousness, Citi's turnaround (with taxpayer help) has been truly impressive and, if I were a C shareholder, I'd want the board to do what it takes to keep Dr. Pandit on the job.

And, Treasury announced it will be auctioning its Citi warrants sometime this quarter.  With the common stock all sold, the Citi pick in my TARPedBanks profile was closed.

Disclosure:  No position in Citi, although it's tempting to swap a little of my WFC out for it. 

Any thoughts on Citi or good bank news/analysis links you'd care to share?

Fool on!

Russ

1 Comments – Post Your Own

#1) On January 22, 2011 at 6:30 PM, awallejr (80.10) wrote:

I made good money off C stock and options in 2009 and made many a suggestion on this website.  The biggest problem now for C is they simply have too many shares outstanding, over 29 billion,  That diluted the hell out of the company and was a main reason why I stopped playing the stock.

Last quarter it earned net income of 1.3 billion to earn .04 a share.  To get the company into the teens and at a respectable 10 PE range it would need to generate close to 10 billion net income per quarter.  I don't see how they can do that.

The company simply has to do a reverse stock split.  In 2009 they solicited for that option and it is just a matter of time before they execute on it in my opinion.

If you are going to play around $5ish stocks I still think you will do better in companies like FIG and NCT.  The catalyst behind those companies is the restoration of their dividends, which presuming they return to profitability they have to pay out since they are BDCs. 

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