Citigroup: A Promising Blue Chip

For the past few weeks, Citigroup (C) shares has been nose diving and it seems that the time to buy its shares at a bargain is coming soon.

Take a look at Citi’s 10-year price history:

click to enlarge

It hit its 52-week low of $17.99 in March this year, and the stock, which is currently trading at $21.12 seems to be a bargain when you consider that its 52-week high is $55.53.

In addition, when you look at Citi’s SEC fillings, the bullishness of insiders also makes it an even more compelling case:

LIVERIS ANDREW N, a director of Citigroup (He is also the CEO and Chairman of The Dow Chemical Company (DOW)), purchased 1,200 shares at $23.47 on 05/13/08.

FORESE JAMES A, an officer, sold 100,000 shares at $25.79 on 04/24/08.

MEDINA MORA MANUEL, an officer, bought 185,000 shares at $27.01 on 01/24/08.

“Wait! What about the write-downs due to the subprime crisis, and Citigroup’s decision to shed $400 billion assets?” - You may wonder.

The fact that Citigroup is the world’s largest bank ensures that there is a slim chance that the Fed will allow Citi to go bust on its own (Or else the U.S. economy will suffer badly).

In addition, Citigroup’s total assets are worth trillions, so $400 billion isn't an amount that can stop it from being the biggest bank.

Being one of the Dow 30 Components that make up the Dow Jones Industrial Average further enhances an “invincibility” aura that Citigroup seems to carry.

Of course, after the Bear Stearns (BSC) collapse, anything is possible, but chances of Citigroup shares hitting $2.00 are extremely low, while there is a huge upside potential given that banks are now slowly recovering from the write-downs.

Nevertheless, I will still be waiting for Citigroup shares to fall further, perhaps to $15.00 before I consider investing, as a recession might be coming. It won't be long before Citigroup shares reach a bottom and that will be the best time to buy an undervalued stock.

Comments

[al s:]

This is the DUMBEST analysis/rationale ever, the writer should be fired pronto or perhaps, already has a job at Citi. Citi is just beginning to reprice its sub-primes, credit card delinquencies are jumping, auto loans stink, reits are going bad, and Citi holds something like $100 billion of tier 3 assets. Gee, why do you think they are at the low end of their 52 week average.
Bye the way, when you "shed" $400 bil of assets you loose the revenue that it generates. Citi is putting itself on a 'JENNY CRAIG' reduction program that will result in a 65 pound weakling when it is all over
In the future don't have a summer intern write a stupid article !!!!

2008 May 27 10:18 AM

[drmalaka:]

I think the most time put into this article was finding the graph to insert. You are spot on though, $15 will be in sight shortly. This company is horrible. This is what happens when bankers run companies, they have no clue how to run a business, all they know how to do is steal from the public.

By the analysis that C is cheap based on its historic high, you must be buying ABK and MBI right now as well, look how cheap they are. And what about CFC, that is pretty far of its high.

Liveris bought 1200 shares. What the hell is that? The dude is probably worh gazzillions and he spent an entire $25k on Citi stock. If that is not the biggest sell signal I have ever seen. That is what he spends on his lower end help for the month. Talk about lip service. You probably believe that NObama loves this country becuase he put an American flag lapel pin on the other day.

2008 May 27 12:33 PM

[Reader 1:]

I don't think C stock will go that far down to $15. I'm confident about the company. It will come out of the hole hoping soon.

2008 Jun 10 09:30 AM