Citigroup (C) 01 (May 08 - Nov 08)

[kennynah]

hahaha...

open up the 10 yr chart....i scared man....look at the volume of of sell offs for the last few months....ouch !!!

but no doubt, at least to my unqualified FA mind, C cannot possibly close shop....(but such a statement is bordering on making prediction...)....

[la papillion]

I am observing C too.

I think around 15 is a good point to start nibbling. This one must be based on faith that their brand is strong enough to wash away all the bad losses that C is in right now. C has one of the strongest credit card business worldwide (i read from some morningstar books...didn't verify this), that alone might save the subprime. Might be the chance of a lifetime to grab US banks at spectacular prices.

No hurry to add this, actually

[kennynah]

alo lapap:

if this being the case, let the charts do the talking....let it show that it has indeed bottomed out, or at least, show that it is bouncing off a low.... and this has to be with a really long term investment horizon to buy now (like Asp).... no one can possibly know how far south this bird is migrating to.... although i note your take on ~$15...it being that lowest of 2002...

and it being so low already.... the upside has such tremendous potential, that it is never too late to hitch onto a upward train...when it happens...even if it is to be at $25.... better to be more assured when an uptrend has developed...

but of cos, if we are talking about day to day, week to week trading...the evaluation criteria is so different... like chickens talking to ducks... cannot have meaningful dialogue..

for example....right now...it's formed a gapped "hammer", a possible "morning star" in the making..if trading ends now... it is such a strong reversal signal....for a day's or very short term trade... but when look at a mid term angle...the TA of this baby is so weak...it just broke recent this year's low...matched only by 2002's low...the entire chart is showing clearly a downtrend since end 2007... how can a long term player buy at this price? maybe the FA justifies it...but the TA surely does not.

just engaging straight talk here...no offence intended to anyone...

[Aspellian]

It seems that the general consensus is that there is no hurry to load up on the US stocks. I will be monitoring this actively. If it does drop to $15, I will be buying more.

Buying Citicorp because of its brand name and like what la pap says, its base on faith that this icon will survive this onslaught.

but wat a spectacular drop today.

[millionairemind]

GS probably got a big short position on all the investment banks when they said the worse is over in May and then backtracked just a few days ago to recommend mostly sells on investment banks.

Be careful out there on who are trying to "mess up and distort" your thinking so that they may benefit from it.

Published June 27, 2008

Citigroup faces US$8.9b Q2 writedown: Goldman
Bank put on sell list; Merrill Lynch also could incur US$4.2b writedown: analyst

(BANGALORE) Citigroup may suffer US$8.9 billion of second-quarter writedowns, forcing it perhaps to cut its dividend again, while Merrill Lynch may incur US$4.2 billion of writedowns, Goldman Sachs analyst William Tanona wrote yesterday.

Headwinds: Citigroup may have to sell assets to raise capital because regulators may forbid it from issuing more preferred or convertible securities, says Goldman

The analyst added Citigroup to Goldman's 'America's conviction sell' list. He said the largest US bank's 32 cents-per-share quarterly dividend is 'not safe', and that the bank may have to issue common stock or sell assets to raise capital because regulators may forbid it from issuing more preferred or convertible securities.

'We see multiple headwinds for Citigroup including additional writedowns, higher consumer provisions as a result of rapidly deteriorating consumer credit trends, and the potential for additional capital raises, dividend cuts, or asset sales,' the analyst said.

Citigroup did not immediately return a call seeking comment.

Mr Tanona also downgraded the US brokerage sector to 'neutral' from 'attractive,' saying deteriorating fundamentals will likely prolong any recovery from the year-long credit market tightening.

European financials fell in early trade yesterday following the report. The FTSEurofirst 300 index of top European shares was down more than one per cent at 1,211.51 points by 1102 GMT, while the DJ Stoxx European Bank Index was down 3 per cent at 294.45.

Citigroup shares, meanwhile, fell 61 cents to US$18.24 and Merrill fell 83 cents to US$34.63 in pre-market trading.

Though Citigroup in January cut its quarterly dividend 41 per cent, Mr Tanona said another cut may be warranted by the bank's lack of current earnings power. He said halving the current dividend could preserve US$3.5 billion of capital annually.

'Given the firm's current level of earnings power, we do not believe the dividend is safe.' On June 17, Goldman analysts led by Richard Ramsden said US banks may need to raise US$65 billion of additional capital to cope with mounting losses from a global credit crisis that will not peak until 2009.

As of May, Citigroup had raised US$42 billion, including capital injections from sovereign wealth fund Government of Singapore Investment Corp, data compiled by Reuters News show.

The bank has also suffered more than US$46 billion of writedowns and credit losses in the last three quarters.

Mr Tanona now expects Citigroup to post a second-quarter loss of 75 cents a share compared with his earlier forecast of a profit of 25 cents. He changed his 2008 forecast for the bank to a loss of US$1.20 a share from his prior view of a profit of 30 cents.

For Merrill, the world's biggest brokerage, Mr Tanona now expects a quarterly loss of US$2 a share, compared with his earlier estimate of a profit of 25 cents. For 2008, he sees a loss of US$3.55, compared with his prior forecast of a profit of 8 cents.

Citigroup could be more exposed than Merrill Lynch and JPMorgan Chase & Co to hedges on its leveraged loan and commercial mortgage-backed securities portfolios, Tanona said.

It will be a challenging quarter once again in fixed income, currency and commodities, impacted by a number of writedowns and trading losses, he said.

'We expect writedowns for Citigroup and Merrill to outpace what we saw from Morgan Stanley and Lehman Brothers Holdings recently, due to Citigroup's and Merrill's large exposures to ABS CDOs (asset-backed security collateralised debt obligation) and associated hedges with the monolines (insurers),' Mr Tanona said. -- Reuters

[blid2def]

It seems that the general consensus is that there is no hurry to load up on the US stocks. I will be monitoring this actively. If it does drop to $15, I will be buying more.

Buying Citicorp because of its brand name and like what la pap says, its base on faith that this icon will survive this onslaught.

but wat a spectacular drop today.

I'd qualify that I think the "consensus" that you're getting so far are from those who believe in timing the market, and who see opportunity costs in buying something at a price and seeing it get lower before it gets higher. Some value investment folks might come around and say anything below $18 is a good price (just as an example, not that I think that price is the watershed), and to ignore the gyrations.

No right or wrong - just thought I'd qualify why folks like K and MM think the way they do.

[kennynah]

GR is my spokesperson.... took the words out of my mouth...i cant do it lagi better....

but for sake of discussion here...

Some value investment folks might come around and say anything below $18 is a good price (just as an example, not that I think that price is the watershed), and to ignore the gyrations.

but what logic is there, if there is a chance that it can go well below $18, that value investors will accumulate, when it can be done even at a possibly lower price??? i just dont understand the logic here...

value investors' money more expandable than others' ?

[blid2def]

Eh... maybe look at it from another angle - like I put my money down at the price I want, and I can now go and spend my time doing other things instead of monitoring and hoping for it to drop further.

I guess a bit like buying computers. I like to assemble my own - so I read up on the configs and pricelists, go SLS, spend time look at good bargains, piece everything together, etc. Save me money but at expense of time and effort. Value investors do their research and buy a PC straight from a brand name (HP, Lenovo, etc.) as long as it's a good PC and a good-enough bargain.

That's what I think lah - tradeoff between time/effort and money.

[kennynah]

and the value investors actually think that current financial sector is of good value now? like they thought Bear Sterns was such a steal when it trading at $60, ~ half of it's highs...before it became $9 and got taken out of SPX list...

just like C now, trading for less than 50% of its high...

value investors, i guess, must use FA to determine a "value" to their stock pick...

just with this "writedown" uncertainty, how can the FA be objective enough to determine, cash flow, receivables, quick ratio, etc... with this unavailable, i am very very ILL convinced FA can be deployed meaningfully to discover "value" of financial stocks now.

using FA in this instance to "value" a financial stock, is akin to using a spanner to open your door lock....totally wrong tool for the job.

[blid2def]

I dunno lah, not for me to fight their corner - none have stepped up in this thread so far to say that the current price is a good buy or not. I don't wanna go into a discussion over whether their thinking is flawed - just wanted to clarify that Aspellion's picture of "consensus" is currently only based on market timers' perspective.