Re C or BAC - right now I prefer C over BAC, because I believe that C is further along to fix the outstanding issues (mortgage warranties etc), due to lesser exposure. i think C has less tail risk and similar upside than BAC, which makes it a better deal. BAC has a more focused business and I prefer BAC CEO over C.
With the recent strength in housing, and due to my believe that the string of issues and the cost associated with them is going to wind down in 2013 at latest, i think there is a clear path to better profitability and probably a dividend. I think C is going to get there head if BAC. i could be wrong of course and new issues could crop up, as it has been the casefor a couple of years already (Libor being one of them).
Just to put the number into perspective, Citi Holding (the bad bank) has been loosing ~920M$ last quarter or 32c/ share. If this loss goes away ( and it will because the assets in Citi Holding are rapidly shrinking) and the capital trapped is deployed, C should earn 5.5$/share rather than the roughly ~4$ now. There nothing else neded to get there, not a better economy, or higher interest rates, or pickup in investment banking, it just a matter of bad assets running off. |
