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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (37128)	3/28/2010 7:51:26 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78744

re C - at 4$/share you are basically acquiring a questionable bank at about tangible book value. I think that most bad loans are already reflected in the books, so that is not that much the issue (at least for me). The issue is earnings power and questionable management - Vikram Pandit has almost no banking experience and came to C via a hedge fund acquisition (the hedge fund later folded). C is a Motley Crue of assets, an underperforming US bank operation and investment bank, some quite valuable international bank and consumer credit operations. If those pieces were broken up and individually sold, they should be worth more than book, if the management stays in place (much more likely, imo) the value that is still there may diminish, because more able competitors will go after their business. For me, it's not worth a bet. I can for example buy into GS (if I bet on an investment bank) for a 25% premium to tangible book and I think it's well worth it. If I want to buy a bank business, i buy small regional bank stocks, most of which still go for under tangible book.

To: E_K_S who wrote (37128)	3/28/2010 11:43:43 PM
From: Madharry	Respond to of 78744

i agree with your post mostly. but there are more issues with regard to banks profitability and accounting. there are potential issues with credit card exposure and derivatives. I think C is a total crapshoot similar to buying a painting. Its worth what someone else is willing to pay for it, unlike a company where one has a feel for the value of the company as an ongoing business and cash flow. Looks like the government has haired Morgan Stanley to sell its stake in C. we shall what impact that has on the price of the shares. I wonder what will be the impact on share prices when prime rates go to 6% say.

To: E_K_S who wrote (37128)	4/2/2010 6:23:33 PM
From: E_K_S	Read Replies (1) \| Respond to of 78744

RE: Citigroup, Inc. (C) - Is this the sign of a bank in recovery mode? I maintain a Citi Bank Savings account that I use for ATM access and to deposit paper checks that I receive (mainly from non-electronic rebate programs). I keep the minimum amount required on deposit (I think it is $500.00) and fund the account from time to time via Schwab electronic ACH deposits. It's nice to have access to cash through their wide ATM network. Upon entering my local branch today for a cash withdrawal, I see this sign posted on all the teller counters. "Deposits in checking, savings, money market and certificate of deposit accounts at FDIC-insured institutions are insured up to $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts which will remain at $250,000 per depositor. Note: Beginning January 1, 2010, Citibank will no longer participate in the FDIC's Transaction Account Guarantee Program. Thus, funds held in noninterest-bearing transaction accounts (non-interest and interest-bearing checking accounts) will no longer be guaranteed in full under the Transaction Account Guarantee Program, but will be insured up to $250,000 under the FDIC's general deposit insurance rules." I am not too sure what the "Transaction Guarantee Program" is but to not have it any more as of January 1, 2010 does not provide much assurance to me than Citigroup has fully recovered and is a stronger bank now than it was 18 month's ago. I suspect they stopped providing this coverage since it cost them more to provide it through the FDIC. It may have been overlapped coverage but as an investor it is less coverage now than before. I am not sure if the other major banks have the same new policy or if this is specific to Citigroup. This is just another reason I plan to stay away from C as an investment. EKS