The Citi Plunge Continues

Citigroup is now worth less than $100 billion, and is trading at about 85% of its book value of $20.73 per share - $17.73, to be precise, at just after noon today. Goldman Sachs analyst William Tanona now has Citi on his "conviction sell" list, although his six-month price target, of $16 a share, doesn't seem very far away at all, given that the bank was trading over $50 this time last year.

The problem with Citi, I think, is not that it's too big to fail, but rather that it's too big to rescue. If Qatar comes in and buys as much as $8.9 billion in Barclays stock, that makes a difference. But $8.9 billion is pretty much Tanona's estimate for Citigroup write-downs in the second quarter alone.

The Sandy Weill Family Foundation and other former white knights at this point seem just too small to be able to inject enough capital to keep Citi's head above water; even the outright abolition of the dividend might not be enough. And there's certainly no one big or foolhardy enough to buy Citi. Which means Citi's only hope is that Vikram Pandit is capable of turning this supertanker around. And that, if you ask me, isn't much of a hope at all.

Comments

[Gross Bill]

He is not planning on turning around a supertanker. He is planning on turning around his own lifeboat and watching the rest sink.

[debtacid]

“The problem with Citi, I think, is not that it's too big to fail, but rather that it's too big to rescue.”

Exactly. How do you rescue a whale that is too weak to swim? Seems that all these debt pirates have lost their business model. Time for the Fed to remove them from life support and let nature take it’s course…

[take a guess]

Haven't you heard on the news or watched on TV about how people saved two whales trapped in the bay near San Francisco? Instead of trying to help them swim, guide them through the river and out to the sea. It takes time and could be painful, but nature eventually did its work with a little bit of help.

[The Jackal]

I see Citi trading below a hat size.....under 10 within six months.

[BS Detector]

You have a big head.

[Jase]

Felix, you're a little pessimistic for my taste. You haven't disclosed your position, I shall assume that you're short Citi and you're simply fear-mongering. Look, while Tanona's got a decent track record, he is but one man; his word certainly isn't gospel. That his comment contributed to Citi's sell off today is comical.

I remind you that Citi's 100 billion market capitalization is still a whopping 30 billion more than Goldman Sachs. In any case, that still says absolutely nothing about their earnings potential. (I can hear you whimper, "What earnings potential?"). For the most part, Citi isn't run by complete idiots. They've weathered worse storms than this; as far as I'm concerned there isn't a company on the planet more capable of a stunning, well-planned, convincing, turn-around. Patience. Even just a year and you'll see stark bottom line improvements. If I'm wrong, I'll eat humble pie.

Why not make this interesting:

Goldman Sachs closed today at 176.26; Citi closed at 17.67. I'll bet you that in one year from today (at market close on June 26, 2009), Citi will, on a percentage basis, outperform Goldman Sachs.

Loser buys Sushi dinner at Hapa Izakaya in Vancouver.

[User 68201]

Jase, let's make the bet.

[jackooo]

Goldman Sachs analyst William Tanona now has Citi on his "conviction sell" list
What took him so long to make this decesion? lol
Oh, I see! Goldman Sachs......