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Citi??? Only if you put a gun to my head!
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In answer to the question of the week, Citigroup is only a screaming buy if someone held a gun to my head and made me buy it while screaming for my life. Even then I might consider it for a while first. /grin There are a number of reasons I would stay away from this stock at this time. First, just because it's down doesn't make it a value. For better or worse, the big (C) is going to feel some pain for a long time to come but most certainly in the next quarter or two. Typically if I were going to buy into a distressed sector like this I would lean towards best of breed here and baby, Citi just ain't one of them. I have to consider Gold Pants Slacks, umm, oops, (GS) and possibly (UBS) as best of breed in this sector (unless you want to count the regional banks, which I might prefer.) Given that, seeing the excessive writedowns UBS just had to take leads me to believe yet another round of very large writedown are in the making. New leadership. I don't know how Pandit is going to run this ship. He says he doesn't want to break the company up and thinks the synergies are good. Maybe he's right, maybe he's wrong but the company's businesses do look a little bloated to me. A little streamlining and getting back to basics is what most of these banks need right now IMHO. Certainly the analysts don't like it. The techinicals are not good for short and intermediate trends and still, nobody really knows exactly what is on their books. Could Citi just skyrocket up? Is it undervalued? Yes and probably. But, for the next few months, C is really just a lottory ticket and quite honestly, I don't like gambling when the government is involved. I play poker, even go to Vegas but I won't play if they can change the rules mid-game. How do you know the true odds on your bet when DiNallo, congress and even the NY state governer are trying to change the rules? The only bet I'm making is more writedowns and more pain next quarter while the politicians jockey for votes. Well, I guess the banks almost always make money long term and the government's position is to make sure that happens which is fine. Bernanke has ensured a steep curve between the 2 and 10 year notes and we will likely see more cuts to come which will always favor the banks in the long run. If you buy and hold for 2+ years I'd bet that you'll make out just fine. There are 2 things I personally need to see before I put any long term money into Citi or any other bank right now and those are a permanent resolution to the monoline and CDO issues and one good quarter in the books. I will probably miss the bottom by then but whats the hurry? I have enough gashes in my hands from trying to play the "catch a falling knife game" right now. Good luck to all, | ||
