FIG trader_

Citigroup: Does a Breakup Make Sense?

To quote the master, the market is a voting machine in the short term, and a weighing machine over the long term. So any attempt to extrapolate from recent performance how well the company is doing and/or whether it should be split up is just watercooler talk. As noted in previous posts, the company outperformed its "peers" substantially over the ten year period, and the stock is only underperforming in the most recent 5 year stretch (though it is catching up fast). The gentleman uses IRA Bank monitor data for comparison purposes, but those figures conflict with reported numbers at 9/30 (for ex C reported a 18.9 ROE for the quarter) and one should be suspect of the inference that portfolio quality reflects mostly subprime (mostly from Associates acquisition) based on the supposed duration of 1.6 (seems like a misprint if you ask me). Default rates of 300 basis points is not sub-prime. In fact, the ongoing rate for most consumer credit card businesses (including COF, MBNA, Discover, AXP ) has consistently been somewhere between 250 and 400 basis points for several years now. I'm not sure where the author is going with all this, since reporting methods change so dramatically over the course of the years, and economic and interest rate cycles, and most companies purposely attempt to obfuscate and hide problems anyways. From investors standpoint, its ROE, ROE, ROE and institutional investors (who do no better at figuring it out than anybody else) seek the business with the best chance of sustaining the current high ROEs at the lowest risk. To try to reduce the size of the industry buckets in which these companies are thrown in more than is already done by S&P in its sector ratings would be a waste of time. For one who has been through the excercise numerous times, its easy to reach the conclusion that PM's are just managing around their core benchmark holdings anyway. Its the safe way to play..............unti... its not.