Citigroup Is a Long Term Value Opportunity - Barron's

Citigroup's troubles may hold hidden opportunity, Barron's says. Last week, the banking conglomerate's CEO resigned and Citi reported a potential $11 billion in markdowns on its $55B in collateralized debt obligations. The mortgage market is still shrinking, and if ratings agencies further downgrade subprime securities, Citi's prime tranches of those CDOs could lose more value. Citi's CFO says CDO writeoffs may have been overdone, but upward revisions would only come when that market defrosts. Aside from CDOs, Morgan Stanley analyst Betsy Graseck estimates Citi holds $95B in consumer finance loans -- comprising 13% of all Citigroup loans. There's $41B in mortgages, $2.3B in home equity loans, $35B in credit cards and $17B in car loans. Further consumer finance writedowns could force Citi to raise loan loss provisions, sell off non-core businesses, or cut its dividend. Yet one bullish analyst says Citigroup's piecemeal value is almost double Friday's panic-induced $33.10. And Citi's principal shareholder, Saudi Prince Alwaleed bin Talal, dismisses breakup talk along with investor fears that a new CEO would have trouble steering Citi's bulk. Citi's diversity and size will help it overcome the current storm, he says. Barron's says Citigroup is a "bargain." Shares could hit 60 in a few years.

Sources: Barron's
Commentary: Who's Failing Us With Bad Information? • Can Citigroup Maintain the Dividend? • Citigroup Stake Hurts Lampert Short-Term • Citigroup 'Crisis': Some Perspective Is In Order
Stocks/ETFs to watch: C. Competitors: BAC, DM, JPM
Conference call transcripts: Citigroup Business Update Call • Citigroup Q3 2007 Earnings Call

Citigroup 1-yr. chart:

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Comments

[Norman Lepo...:]

Another great article on Seeking Alpha. I have to say that Seeking Alpha has been one of my best resources.

2007 Nov 11 06:21 PM

[Dan Jacome:]

Tom over @ Bankstocks.com has been asking for a Citi break up LONG before any dope sell side analyst, he should get the credit....

2007 Nov 12 07:31 PM

[flamecutter:]

Interesting to read this article for November that was "bullish" on Citigroup by Barron's suggesting it was a long term value opportunity. hahahahaha. I love this part:

"one bullish analyst says Citigroup's piecemeal value is almost double Friday's panic-induced $33.10"

hmmmm, today July 27 that same Citigroup's stock is trading at about $2.75. YAY Barron's.............

Jul 27 07:43 AM