The government's trash appears to be investors' treasure with AIG as well as Citigroup leading the markets higher. Is the trade fundamental or froth?
Stop us if you've heard this one before; a whiff of good news comes out of AIG and shares skyrocket.
You remember the story from back in July when AIG shares surged after talk of restructuring captivated investors.
But a long position hasn’t gone so well if you established that position in say – October.
Well, seven months later, that dash for trash is back on, this time triggered by the sale of an overseas unit.
And Citigroup is a similar story. Surging over the summer only to plunge in the fall – then jump again.
Will the ‘dash’ end differently this time?
Strategy Session with the Fast Money traders
It’s a classic short squeeze in AIG, says Guy Adami. If you’re on this stock, get off it on Thursday.
I agree entirely, says Joe Terranova. AIG is a short squeeze.
However, Citigroup is different. Hedge fund mangers are buying Citi. If institutional money mangers also start buying I’d be a buyer in their wake, Terranova adds.
I agree that Citi is very different than AIG, says Brian Kelly. As Citi spins off assets the remaining core company has real value.
I can’t get on board Citi, says Steve Cortes. In fact, I took profits in the financials, he adds. I think the space is frothy. The risk reward doesn’t not look attractive here.
AIG shouldn’t be compared to Citi, says veteran trader Gary Kaminsky. AIG has no fundamental basis.
Citi, however has a game plan, he adds . I'd expect them to deliver a positive earnings surprise which in turn should get institutional investors interested in the stock.
And looking ahead, I wouldn’t be surprised to see a reverse split in Citi. Ultimately I don’t think Citi will be a standalone entity two years from now. I expect they will get taken out.