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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (27873)8/31/2007 12:05:22 AM
From: Spekulatius  Read Replies (2) of 78748
 
Regarding Citigroup. I hold too much Citigroup stock. I sold some when it hit 54$ but bought back when it hit around 50$. Needless to say I am now underwater with most of my positions.

I think short term C is trouble, as there is going to be some fallout from the subprime and leveraged loan crises. Although i am just guessing I suspect that C has to write down 2B$ next quarter (assume 20B$ in bad loans that are worth 10% less), mostly from leveraged buyout commitments. I do think that C's exposure from mortgages is less than average. Also investment bank earnings will certainly suffer. All in all i think that next quarters earnings will be way below forecast. I suspect that some is already baked in but who knows.

I do like C's diversity from it's far flung operations. Now more than 50% of C's earnings come from abroad. C is strong in some parts of Asia and earnings should grow quickly in this part of the world. But others are doing better at home.

I did use the recent surge in BAC stock to reduce my position by 75% and have reinvested some proceeds in WF. I am also pondering to put some funds into WB and BCS. BCS is interesting because I see ABN going to RBS.L (which I also own) and I think this will boost BCS stock. BCS also has some problem on it's own but they do have a nice dividend and a cheap valuation.

I need to hold my nose to buy financial stocks, as I am probably already overweighted in this sector but the valuations are cheap and i do not see the nice dividends that many larger companies pay going away.
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