Citigroup shares may be not worthless?

September 15, 2009 by · Leave a Comment
Filed under: Stock Market News 

Well this may be correct, with the amount of losses Citi has written-off and the “assistance” Uncle Sam has extended to them, yes the shares may be have some real value.  I still don’t agree with the bailout and the socializing the losses but it is done now so we have take a look at their value.  Even Jim Cramer called it when it was at $3.75 per share that it was a “buy”. he laid out a case for the purchase of the shares and it pains me to agree with his assessment.  They still have massive derivative exposure so if somehow those are triggered then they would be in serious trouble, unless we bailed them out again.  Could happen, seriously.

DISCLOSURE: I am not a financial advisor and this article or any articles in this website should not be taken as a recommendation to purchase this or any other securities.  Please talk to a registered financial advisor before making any investment decisions.

Reuters, New York – Citigroup Inc is slowly regaining favor among institutional investors, a development that could help the U.S. government unload its 34 percent stake in the still-troubled bank.  A series of bailouts has put taxpayers on the hook for tens of billions of dollars of potential losses, but left Citigroup with some of the strongest capital ratios in banking.

Citigroup may also have suffered many of the steepest losses it faced in its consumer loan and lease portfolio. The government is covering some potential losses on the bank’s most toxic assets, and Citigroup shares trade at a lower valuation than many of its competitors.

That seems to be translating to investor demand. Citigroup shares have more than quadrupled since early March, closing Tuesday at $4.12.

Even hedge fund manager John Paulson, who famously shorted banks and brokers going into the financial crisis, has been buying the bank’s shares, a source familiar with the matter said.  Three other fund managers who long shunned the stock said they may start buying. They requested anonymity because they do not want to disclose investment positions they have not taken.

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