So now that C has been raked over the coals, what do we do?
Why, we buy Citigroup stock!
Here's what I think is happening with Citigroup. It has now fallen way behind the other banks, in terms of its relationship to book value. You are getting an undeserved discount, given the government's ring fence around the Citi Holdings portion of the company. Also, there's the fact that it is starting to win. Just this morning, for example, Reuters reported C is advising in the airline-merger talks.
I also believe Citigroup isn't getting much credit for keeping Mexico during the great peso surge, or for continuing to expand in East Asia, unlike almost all other American banks, allowing it to participate in the strongest part of the world economy.
All I ever read about regarding C is that they will wait until the government does its offering; then they will pick it up. I wonder whether the government isn't savvier than that, and won't take its sweet, old time, just as it did with Chrysler in the 1980s. Those people tried to game the government, and they left gobs and gobs on the table, as the government let the stock run and run after it had done its bailout. I believe Tim Geithner has seen that movie, too, and wants to get the maximum gains.
Many were critical of the government for not registering stock when Citigroup was at $5, but that was before the bank had paid back its TARP money and when it looked like Sheila Bair wanted to run the company. Those days are gone, and the strong performance of Citigroup executives in front of various investigators helped to put them behind us.
very long C leaps