Monday, March 29, 2010

Shareholders Sticking with Citigroup (NYSE:C)?

Citigroup and Treasury Selling Shares

We have the usual contradictions in a hyped stock in Citigroup (NYSE:C) as those like Dick Bove say it's time to buy and others are questioning whether shareholders should run from the stock now that the Treasury Department has said it's going to divest of their stake in common shares in the company in 2010.

The question is whether the sale of shares in the company will result in the price being knocked down for some time, or if the anticipated sales has already been priced into the stock.

The other concern is about the assets held in its specially-created Citi Holdings unit which exists to sell off the non-core or poorly performing assets. There's over $500 million held in that unit of the company, and until they're sold off, it lingers over the head of Citigroup.

Bove has stated he believe once the assets are divested and the company restructured, Citigroup should generate 70 cents a share in earnings.

As far as the government goes, it's an odd situation in that people consider the government holding onto the shares is a negative, the government selling them could dilute them, the government can sell them so they're considered strong, and the shares of Citigroup will be strong because the government says it is able to sell them.

Citigroup will remain a contradiction and anomaly for some time, and no matter what the many people say, it's very uncertain in the short- to mid-term where the company will head in share price, in my opinion.

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