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An article in this morning’s Chicago Tribune illustrates how on Wall Street what looks good on paper and on spreadsheets, often doesn’t translate into the real world. The article quotes a research report put out by a major sell-side firm which highlighted several companies who are currently so cheap that they could become takeover targets. The list of names included Bank of America (NYSE:BAC) and Citigroup C.

We certainly agree that an argument can be made that each of these companies are cheap on a valuation basis. However, who can actually take over these companies? Citigroup and Bank of America are the fourth and fifth largest companies in the country, and rank in the top ten in the world! So unless Exxon Mobil, GE, Microsoft, or Russia’s Gazprom are looking to diversify into the banking sector, we wouldn’t be buying these stocks in hopes that they get bought out.

Source: Bank of America, Citibank Takeover Targets On Paper Only