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Tacomatight (73.64)

What's your feeling on Citigroup (C)?

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January 08, 2010 – Comments (7) | RELATED TICKERS: C

I began building a large position in Citigroup when the stock was hovering at 3.20. It is now the largest position in my portfolio. This is a long term hold (2-5) years. I believe Citigroup, at this mid 3 price is a generational opportunity and will continue to add to my position at the current price. Why?

1) Citigroup (C) will eventually pay a dividend again.-My theory is that each share will eventually pay a dollar each.

2) Citigroup (C) is getting it's act together and will once again be a good-great company.

3) Citigroup (C) the stock will most likely double this year and eventually return to the teens.

What do you guys think? Anyone else agree and running this strategy? Anyone think I am insane and should dump my money into mutual funds, then find a hobby such as gardening? 

As always I value your thoughts and opinions.  

7 Comments – Post Your Own

#1) On January 08, 2010 at 1:46 PM, Tacomatight (73.64) wrote:

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#2) On January 08, 2010 at 2:09 PM, amyers1 (62.54) wrote:

C is a good spec play but should not be the majority of your holdings. I would advise you to reduce this to a maximum of 5 to 10 pecent of your holding and hope for the best. You may be right and I own a little C too but I am not willing to cash out my stock holdings and bet it on a craps roll which is what you are doing with this. This sotock may double or triple this year in five years it may be back in the twenty dollar range but is just about as likly the feds take them over and you lose everything. It pays and is fun to gamble but not with that much of your portfolio

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#3) On January 08, 2010 at 2:39 PM, davejh23 (< 20) wrote:

I agree with amyers1.  This is a very speculative play, and I would reduce my position.  If you're already up about 10% on the position, you're lucky.  For now, it seems more likely that C will fail than ever rise to the teens and pay a $1 dividend.  I'd bet that they go under within your 2-5 year holding period.  Considering the level of public outrage over bail-outs, if C's financial situation worsens at all, I could see the administration making an example of them as a political move to show the public that they're listening.

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#4) On January 08, 2010 at 3:06 PM, alexxlea (66.68) wrote:

Learn Hold Em or Blackjack.

Use your C money and play those games.

Profit. 

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#5) On January 08, 2010 at 5:14 PM, rd80 (98.26) wrote:

I think your valuation targets on C are extremely optimistic.

C's current market cap is $80+ billion with nearly 23 billion shares outstanding.   Unless it can come up with the money to fund a massive share buyback, getting in to the low teens would mean Citi would not only be the biggest financial firm in the world by market cap, it would pass ExxonMobil as the biggest firm in the world by market cap.

Similarly, the $1 per share annual dividend target would put the total dividend payout at $23 billion per year.  For comparison, Exxon's total dividend payout is $8 billion per year, JNJ pays out $5.4 billion per year, PG pays out a little over $5 billion per year - and those companies all have actual profits.

Add to that, Citi is alone among the big banks in that it hasn't reported positive earnings without relying on one-time events.

IMHO, C is a decent speculative play, but it'll be hard pressed to hit a double anytime in the next several years and there's a fair chance it has to go back to the gov't again if the economy doesn't pick up soon.

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#6) On January 08, 2010 at 5:28 PM, davbeirney (24.65) wrote:

Having a troubled company as a majority holding is not such a great idea. Check your motives. it seems to me that you are being way too optimistic. Citi will probalby have to sell more shares to cover losses, or issue some bonds. Citi will probably be stuck in a range for a long time, unless the job market suddenly spikes, and the housing market improves to the levels of 2-3 years ago. Why invest in something simply on the hopes conditions will improve? Invest on the facts. There are safer banks than Citi i.e. NYB, NTRS,and maybe JPM. Try not to fantasize about the most optimistic situation for a company because chances are that the situation will not play out. Also, extreme optimism breeds extreme greed and bias. Always be willing to change your opinion on a company if things move against you

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#7) On January 13, 2010 at 6:23 PM, miteycasey (30.31) wrote:

One word......Dilution.

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