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

[ishak]

XLF
28-Jul-08 ---- 169,887,400 - 19.89
25-Jul-08 ---- 196,090,300 - 20.87
24-Jul-08 ---- 272,445,800 - 20.95
23-Jul-08 ---- 356,420,100 - 22.46
22-Jul-08 ---- 331,263,300 - 22.49

C is now 17.24. Volume suggests the ban on naked short is working but no catalyst to push the financials up.
Continue to hold SKF, waiting for C @ 15 and UYG @ 17.

[kennynah]

they r assuming C has some 16bil writedown.....or abt $2+/share....bcos of mer's 22cts to the $1 sale of their assets...

[ishak]

Ya, a writedown from $0.36 to $0.22 for Merrill Lynch. I don't think all the CDO they are carrying are worth 0 but i am not an expert in predicting the value of the CDO. Let's see whether there is any news on the take up of the sale, that will determine whether there is another catalyst to push them up or down.

[ishak]

According to this report, C's CDO assets is marked in US50¢ range.

Upside for Merrill? Stronger economy and credit markets could reverse writedowns
Canadian Network
Posted: July 29, 2008, 2:21 PM by Jonathan Ratner

Analysts are calling Merrill Lynch & Co.’s decision to sell US$8.5-billion in common stock, terminate its hedges with monoline counterparties and dispose of most of its ABS CDO portfolio a painful but necessary step to push the company forward and beyond the year-long detour linked to its legacy assets.

Merrill’s senior executives are buying 750,000 common shares, while Singapore sovereign wealth fund Temasek Holdings will buy roughly 124 million of the 310 million in total new shares with US$900-million and a rebate of US$2.5-billion linked to its original US$4.4-billion investment. This cuts the cost of its shares in Merrill roughly in half to US$21 each.

The Street slashed its 2008 earnings estimates as a result of the dilution that could bring the number shares outstanding up 38%, along with accelerated writedowns of US$5.7-billion expected in the third quarter.

Analysts like Mike Mayo at Deutsche Bank liked the fact that Merrill is getting ahead of others in collecting money from monolines, compared with waiting 20 to 40 years.

“The good news is that the actual sales can give confidence that it is finally selling assets vs. merely marking them to market,” he added in a note to clients.

Among the downside risks he sees for Merrill going forward is unsurprisingly the performance of mortgages. However, Mr. Mayo says the potential upside from a strengthening economy and credit markets could lead to reversals of previous writedowns.

But despite the fact that the deal lowers Merrill’s CDO exposure, risks nonetheless remain. For example, Merrill is providing financing for 75% of the US$6.7-billion purchase price, Goldman Sachs analyst William Tanona told clients.

Analysts are also forecasting negative implications for firms like Citigroup Inc. For example, Mr. Tanona noted that its assets appear to be marked in the US50¢ range, while Merrill sold its ABS CDO exposure for US22¢ on the dollar.

[kennynah]

According to this report, C's CDO assets is marked in US50¢ range.

if this is to be true, than we are looking at CDO assets marked at usd8Bil...this translate to a hit of $1.50 on share price.... compared to >$2 earlier suspected.....my simple way of looking at things..

no wonder, at 230am onwards....c started climbing...(but so did all other financials)

hence...we looking at ~19.50 target???? anyways....just ROL....ignore if this makes no sense...

[ishak]

Citigroup faces formal SEC probe, state subpoenas
1 Aug 2008

NEW YORK (Reuters) - Citigroup Inc (C.N) on Friday said the U.S. Securities and Exchange Commission has opened a formal probe into possible violations of federal securities laws in connection with the sale of auction-rate securities.

The largest U.S. bank by assets also said it is responding to subpoenas from state agencies, including those in Massachusetts, New York and Texas, concerning the securities.

Regulators are examining whether banks and brokerages nationwide misrepresented the safety of auction-rate securities to investors. The $330 billion market normally lets municipal issuers borrow money long-term but at lower, short-term rates. Some of the market remains frozen after a February meltdown in which brokerages quit their role as buyers of last resort.

Separately, Citigroup said it is cooperating with information requests from governmental and self-regulatory agencies regarding several bank-managed hedge funds, including Falcon Two, ASTA and MAT Five LLC.

Citigroup disclosed the various regulatory actions in its quarterly report filed with the SEC.

[kennynah]

kana hammering as soon as this info was released...which came out seconds after the bell this evening...

[ishak]

Coming close to 16

[kennynah]

looks like we r on opposite sides of this trade. Haha. No problem. Mkt so big, 2 of us can't make a scratch even if tried with all our might.

[ishak]

XLF
31-Jul-08 ---- 169,315,100 - 21.63
30-Jul-08 ---- 271,696,000 - 21.83
29-Jul-08 ---- 249,956,300 - 21.50
28-Jul-08 ---- 169,887,400 - 19.89
25-Jul-08 ---- 196,090,300 - 20.87
24-Jul-08 ---- 272,445,800 - 20.95
23-Jul-08 ---- 356,420,100 - 22.46
22-Jul-08 ---- 331,263,300 - 22.49

Careful now, financials now out of the doldrums yet and no story so far to push them up. When the ban on naked short end in mid August, could be another massive selldown.