Wednesday, February 17, 2010

Hedge Fund Herding Into Citigroup............

Either the "Too Big Too Fail Moral Hazard Play" is still alive & kicking or they are just averaging down..........Probably both.... SCHADENFREUDE that at least so far the timing was "subpar"...... ;-) .... Just as a reminder Citi has still a marketcap of $ 100 Billion! But this cannot stopp Dick Bove to give a price target of $ 8.5, bringing the market cap close to $ 250 billionen.......Even the $ 100 billion would be far bigger than any German company listed in the DAX..... Not bad for a bank that Chris Whalen calls the "queen of the zombie dance party".....

Entweder die "Too Big Too Fail & Moral Hazard Karte" wird von den Big Boys weiter heftig gezogen oder hier wird schlichtweg "verbilligt".....Wahrscheinlich eine Kombination von beidem..... Kann die Schadenfreude bei dem bisherigen Kursverlauf nicht wirklich verhehlen...... ;-) Verweise zusätzlich nochmal darauf hin das Citi aktuell einen Börsenwert von knapp 100 Mrd $ auf die Waage bringt.....Überflüssig zu erwähnen das Dick Bove bereits ein KZ von 8,5 $ ausruft.... Also mal eben schlappe 250 Mrd $..... Bereits 100 Mrd $ wären deutlich mehr als jedes im DAX gelistete Unternehmen ..... Nicht übel für ein Institut das Chris Whalen als queen of the zombie dance party" adelt......


Citigroup Proving Irresistible to Hedge Funds Led by Paulson Bloomberg
Firms run by John Paulson, Eric Mindich and George Soros purchased almost half a billion shares in Citigroup Inc. last quarter as more than 120 hedge funds said they bought stock in the bank.
Paulson & Co. reported a stake equal to 506.7 million shares in New York-based Citigroup, up from about 300 million at the end of the third quarter, according to a government filing yesterday. Mindich’s Eton Park Capital Management LP acquired 138 million shares, making the company its largest holding. Soros Fund Management LLC reported 94.7 million shares worth $313.4 million.
Citigroup stock bought by hedge funds outnumbered the amount sold by a ratio of more than 10 to 1 in the October-to- December period, with about 1.2 billion shares added on a net basis, according to Securities and Exchange Commission filings compiled by Bloomberg.

The shares traded for an average of $4.10 in the quarter, 24 percent above its closing price yesterday of $3.31, data compiled by Bloomberg show. The company had 28.5 billion shares outstanding as of Dec. 31, the data show.


I doubt that they all bought at the low during the Monster stock offering ( see Citi prices $17 billion stock offering at $3.15 a share; Treasury not selling its shares )....

Kann mir kaum vorstellen das hier alle am Tief im Rahmen der Megakapitalerhöhung zum Zuge gekommen sind ( siehe Citi prices $17 billion stock offering at $3.15 a share; Treasury not selling its shares ) ........
Taxpayers still own 7.7 billion Citigroup shares....
Citigroup has had to issue almost 23 billion new shares to bolster a weakened capital base. Investors who were shareholders prior to the financial crisis were left with about one-fifth their original stakes.
Let´s hope they will still be there when Citi has to issue another round of new shares....... This would be for a change good news for the taxpayer......

Bleibt zu hoffen das die bei den zukünftig regelmäßig nicht unwesentlichen anstehenden Kapitalerhöhungen immer noch an Bord sind....... Wäre für die Steuerzahler ausnahmsweise mal ne gute Nachricht....

UPDATE:





Thanks CHRIS!

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4 Comments:

Blogger marin belge™ said...

It looks certainly more politically correct to buy CITI shares than GOLD or stakes in investment banks... But isn't it a clear anticipation of a coming massive inflation in the US by the hedge fund community?

8:44 AM  
Blogger jmf said...

Moin MB,

i was really surprised that they flocked to Citi....

It was strange to see Paulson & Co
buying BAC during the past year....

I´ve seen his investor letter rationalizing his investment in BAC....

Based on "normalised earnings" in the year 2013/2014 he is predicting a share price close to $ 35......

Such bets are clearly motivated from the believe that TBTF & the ongoing (hidden) bailouts via the Fed or Freddie/Fannie/FHA/Congress/ easy accounting stunts will still be in place for years to come

8:57 AM  
Blogger jmf said...

Should be fun if the so far very strong support gets violated.....

Chart.ly Chart of the Day: Citibank C

6:05 AM  
Blogger jmf said...

Probably the quote of the day from Wall Street Finest....

The company is focusing its guidance on GAAP results. Berenbaum cautions that this “could have a negative near-term impact on NVDA stock,” as some analysts “may face a choice between lowering price targets or accepting unusually high valuation multiples. Likewise, Morgan Stanley analyst Mark Lipacis says that the decision to include stock-based compensation in guidance, combined with the aforementioned higher tax rate, puts a cap on near-term EPS upside

From last year...."Reported Earnings vs Operating Earnings"


Today reported earnings per share for the S&P 500 companies gathered by Standard & Poor's is $7.2 per share, down 91 per cent from the 2007 peak.

On an adjusted operating basis, earnings are $61.2, down 34 per cent from the 2007 peak.

This $54 gap is a record.

8:57 AM  

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