"Hi. My name is Tim. I just took over a large hedge fund from a seasoned older manager who left the firm. We're turn-around experts investing in banks. We've made an amazing 25% trading in banks stocks over the last year. And we're still holding!
"If returns like this interest you, we'll even let you invest with us! Just write us a check by April 15. No lengthy prospectus to read. Just a convenient 2 page form to fill out, sign and send in."
....So when will financial newsletter publishers start writing ad copy for the US Treasury?....Soon, perhaps very soon.....
Bloomberg's got some coverage on Citigroup, of interest to the longs. The Treasury is effectively blocking Citigroup from paying off its TARP debt by refusing to sell its common. The Treasury is sitting on a $6 billion gain and could net $30 billion if it sold (assuming it could unload a block in an orderly fashion. Dial 1-800-Goldman-Sachs.)
With the Treasury overhang out of the way, Citi could then issue stock and debt to repay its TARP obligation, giving the Government another $20 billion.
Citi has repaired its balance sheet and now holds $244 billion in cash, more than any other US bank. Surprisingly, by MSNBC's calculations of troubled asset ratios, Citigroup's Citibank, NA (Las Vegas) and Citibank (South Dakota), NA units were in better shape than JPMorgan-Chase, Bank of America, Wachovia, Wells Fargo and US Bank as of 2Q-2009. [Generally comparing (past dues + non-accruals + owned real estate) to (capital + loss reserves)]
So, let's get this right: The country is broke. The taxpayers could get $50 billion coming back home right now. Citigroup is apparently back from the brink. Citigroup benefits by being out from under the Government's thumb. If the stock gets a pop on the payoff, the Government gets to tax those gains.
And our "fund manager" is gonna hold? I don't get it.
Investment sentiment: long on Citi, holding my position.
Just my opinion.
Citigroup Said to Need Treasury Stake Sale Before TARP Payment
Disclosure: Long C. No positions in GS, JPM, BAC, WB. USB, WFC