Dick Bove’s Lonely Quest
Dick Bove has gotten as much face time as anyone on the SellSide since the banks and brokers hit the skids in June.
But Meredith Whitney has upstaged him of late, and he is becoming increasing shrill in his pleadings. Are you buying it?
Punk Ziegel recommended investors buy Citigroup Inc (C.N: Quote, Profile, Research), a day after the bank announced moves to overhaul its U.S. residential mortgage business, and said new rumors in the market suggest that the financial giant’s capital strength may be greater than thought.
“There has been a leak/rumor ... that Citigroup’s Tier One Capital could be at 8.8 percent of assets at the end of the first quarter,” analyst Richard Bove said.
He added that if these rumors are true, Citigroup will not take “mammoth” write-offs in the first quarter and that his earnings estimates would also prove to be too low.
Bove also noted that the stock was now selling below expected revenue for 2010 and well below stated book value.
“This is simply ridiculous. Fear has replaced logic. Buy it,” he said. Citigroup’s shares have fallen by about three-fifths from their 52-week high on May 23. Reuters
I think Citi should consider spinning off or selling Smith Barney’s retail brokerage network, but that does not appear to be in the cards. They certainly could not garner top dollar in this environment, and Bove is stressing that Pandit is moving along with his plan.
“What Mr. Pandit is not doing is breaking up Citigroup into a number of large separate businesses. He is committed to developing working relationships or cross selling among the company’s existing operations,” Bove added.
Punk Ziegel says buy Citi on rumor of further capital strength
Reuters
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