Stock Brawl: Citigroup
Stock Brawl is our Tuesday special for the next eight weeks on the Closing Bell.
We will examine a widely held stock and examine whether the stock is a buy or a sell.
Today’s big name: Citigroup .
With a marketcap of $110 billion, it is one of the largest financial institutions in America. It has over 200-million customers, operating in more than 140 countries. Citigot its size by making deals around the world. The company has been a big buyer, involved in over $98 billion in transaction in the past ten years according to S&P Capital IQ.
Year-to-date, Citi shares are up 14.5%, outperforming 7.91% decline in the S&P. However, in a 3-year period, Citi’s stock is down 92.67%, compared to a 32.84% drop of the S&P. Citi is set to report earnings on Friday, July 16th. (Track all Citi news here.)
All-Time High: $57 a share (12/18/2006)
All-Time Low: $1 a share (03/05/2009)
THE BULL ARGUMENT
Veteran financial strategist, Dick Bove at Rochdale Securities is convinced the stock is a screaming buy. Citigroup is Bove’s favorite company in this sector. Bove says Citi can jump to $8.50 a share in 3 years, which would be a gain of 125-percent. If Bove’s right, that’s not too shabby of a stock to invest in.
Citi has a few assets it must shed: (1) its commercial credit business (2) 49% of Smith Barney (3) mortgage processing business. In a reasonable market, basically those assets will be sold and bring value to Citi, Bove adds.
Outlook is bright for what’s left: (1) international credit (2) capital markets (3) domestic banks in New York and California (4) payment services
THE BEAR ARGUMENT
Portfolio Manager Harry Rady of Rady Asset Management is totally out of the stock. The firm has $250 million assets under management and he won’t invest a cent in Citi shares.
Rady is concerned that Citi is “too big to manage.” Rady says the world is moving too fast for Citi to continue in its current form.
However, Rady says if the stock were at $5 a share, he may consider shorting the financial giant.
THE STOCK BRAWL
Watch Bove and Rady duke it out. Here's the clip: