Fast Money: Who Will Be the First to Repay TARP Funds (2/27/09)

Recap of CNBC's Fast Money, Friday February 27.

Who Will Be the First Bank to Repay TARP Funds: Goldman Sachs (GS), Morgan Stanley (MS), IberiaBank (IBKC), Northern Trust (NTRS)

Who is going to be the first to repay TARP money? It’s not Goldman Sachs or Morgan Stanley, but IberiaBank, which took $90 million in exchange for preferred stock through the Capital Purchase Program. This was a program designed for strong banks, but once restrictions were placed on all banks which received TARP money, IberiaBank promptly sent the funds back. The strings attached are just too entangling to consider keeping the money. The news is out that Northern Trust will be the next bank to repay TARP money.

Government Takes a Stake: Citigroup (C)

The government is buying up a large stake in Citigroup and is converting $25 billion preferred shares to commons stock. This caused shares of Citigroup to drop on Friday, and as a result, there was a selloff late in the day. Joe Terranova says contrarians see a reason to be optimistic. Karen Finerman noted the move was good for preferred shareholders and said she is long preferred shares of Bank of America and is short the common. Joe Terranova would stay away from Bank of America and Citigroup and would consider Morgan Stanley or Goldman Sachs. Jeff Macke says Citigroup did a deal with the government to retain its credit rating and ended up stiffing the shareholders.

GE (GE) Cuts Its Dividend

GE made a steep 68% cut to its dividend, a move which will save the company money and make it unnecessary to raise equity. Karen Finerman thinks it is a smart move.

Technology SPDR ETF (XLK), Dell (DELL), IBM (IBM)

In spite of the dismal environment, XLK is down only 2%, and investors like Dell’s cost-cutting scheme and IBM’s guidance. Joe Terranova is long Dell and thinks it could reach $11. He notes the stock is heavily shorted and there might be some short-covering. However, Pete Najarian does not see growth potential for Dell and prefers IBM.

Has Gold Topped?

The group discussed a possible top in gold; after reaching $1,000, it declined 6% last week. Joe Terranova identified $920 -$930 as the point of support.

Oil Rises 12% :Massey (MEE), Arch Coal (ACI), ConcoPhillips (COP)

Oil jumped 12% for the week and brought up coal stocks Massey and Arch Coal with it. After a long period of decline, natural gas seems to be recovering and Joe Terranova is long ConcoPhillips. Pete Najarian would buy ag stocks ahead of the Credit Suisse conference in two weeks.

Athenahealth (ATHN): Obama Healthcare Trade

Obama’s healthcare plan has not been such a boon for many stocks in the sector, but one company to benefit from its proposal to create electronic medical records is Athenahealth. The company improves efficiency and allows doctors to get paid faster. For some reason, the stock was down on Friday, but some see this as a buying opportunity.

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Comments

[MRZ:]

C did an excellent move by "stiffing" the shareholders, maintaining the credit rating is way more important on the long run, remember they are a bank!!!! They will also save the dividend they were paying on that Tarp money.

Mar 02 10:47 AM

[Mad Hedge F...:]

Here's a candidate. Bank of America’s (BAC) Ken Lewis says that he won’t resign until he pays back the $45 billion in TARP money he owes the government. So paying $50 billion for something that is really worth a negative $170 billion is a bad career move? That’s a revelation! I can see that secrecy is a concept that is forever banished from the investment community. CEO’s won’t be able to make an acquisition, nor fund managers raise a single nickel from here on, without a complete undressing, and a full proctologic exam!

Mar 02 02:15 PM

[einstein p ...:]

Al-Qaida will be the first to return the TARP money. We seem to be doing a good job of destroying America and the rest of the world without any outside help.

Mar 02 04:36 PM

[Dan Jacome:]

"For some reason" ATHN was down??? Yeah, they guided to lower q109 gross margin and the street freaked out

Mar 03 07:46 AM

[Alex Bernstein:]

Athenahealth today 6% up despite shorts who drove the stock 27% down. Tomorrow Athenahealth will go up, becouse we should expect short squeeze. Expect another up day with range of 5 to 15% up tomorrow.

Mar 04 02:52 PM