Citi
- Thread starter kinggyppo
- Start date
I'm selling OTM call options given that it's down near $5.
I'd be more confident going short or buying puts at Friday's prices.
As we found out in November, the 'bailout policy' has changed a lot since September. It used to be 79.9% stake for the government, but now it's changed to the stage where there is much less dilution for existing shareholders.
When the (second) Citigroup bailout was announced in November, the stock actually rose on the Monday. One reason for this was that the strike price for the warrants was set way out of the money.
I'd be more confident going short or buying puts at Friday's prices.
As we found out in November, the 'bailout policy' has changed a lot since September. It used to be 79.9% stake for the government, but now it's changed to the stage where there is much less dilution for existing shareholders.
When the (second) Citigroup bailout was announced in November, the stock actually rose on the Monday. One reason for this was that the strike price for the warrants was set way out of the money.
Latest rumor is that this recent price moves is directly related to being on the wrong side of several sizable CDS.
m22au,
I think the next bailout(if there is one) C gets wipedout. paulson said if there is no chance of private capital then they wipe shareholders, geithner might subscribe to the same policy since he comes from the Fed and in banking the general policy is to wipe out shareholders and sub debt(when the fdic takes over)
It gapped outside yesterday's trading range, yet it still filled it and went higher. It appears the big boys are toying with the little guys on this one. Do we have any daytraders around here making money off of C lately?
Stop the Charade, Nationalize Citi
http://finance.yahoo.com/tech-ticker/article/157347/Stop-the-Charade,-Nationalize-Citi
After approaching $5 early Tuesday, Citi shares rebounded midday on reports the company is both close to selling Smith Barney and ready to abandon the financial services "supermarket" model.
But lost in the headline excitement over the strategy shift and pending sale of Smith Barney is a sobering reality: Even after receiving $45 billion of direct federal funds and another $250 billion in debt guarantees, Citigroup needs to raise yet still more money. (Splitting the company into a "bad bank-good bank" structure, as is also reportedly being contemplated, is a positive step - but let's assume Citi will still need more capital, with the government being the most likely provider.)
Before the government puts another dime of taxpayer funds into Citi, let's stop the charade and fully nationalize the company, including:
* The removal of the current management team, including the board of directors, ideally with some clawback of executive pay.
* A wipeout of existing stakeholders, debt and equity alike.
* Forced write-down of bad debt.
Such a plan - which certainly applied to all troubled banks, as Henry Blodget writes - would have to be done in a way that protects customers and takes into account risks to Citi's counterparties; notably, other big banks and insurers like AIG that may too come back for more government largess.
But at the end of the day, the government could create a new class of shareholders, a.k.a. U.S. taxpayers, who will have an opportunity to profit from any upside. That's instead of the current situation of average Americans being stuck subsidizing those who took the risk of investing in Citi and other firms, and are benefiting from (if not overtly advocating for) the grotesque philosophy of privatized gains and socialized risks.
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I like the thinking, but I find it hard to believe that this will actually happen
http://finance.yahoo.com/tech-ticker/article/157347/Stop-the-Charade,-Nationalize-Citi
After approaching $5 early Tuesday, Citi shares rebounded midday on reports the company is both close to selling Smith Barney and ready to abandon the financial services "supermarket" model.
But lost in the headline excitement over the strategy shift and pending sale of Smith Barney is a sobering reality: Even after receiving $45 billion of direct federal funds and another $250 billion in debt guarantees, Citigroup needs to raise yet still more money. (Splitting the company into a "bad bank-good bank" structure, as is also reportedly being contemplated, is a positive step - but let's assume Citi will still need more capital, with the government being the most likely provider.)
Before the government puts another dime of taxpayer funds into Citi, let's stop the charade and fully nationalize the company, including:
* The removal of the current management team, including the board of directors, ideally with some clawback of executive pay.
* A wipeout of existing stakeholders, debt and equity alike.
* Forced write-down of bad debt.
Such a plan - which certainly applied to all troubled banks, as Henry Blodget writes - would have to be done in a way that protects customers and takes into account risks to Citi's counterparties; notably, other big banks and insurers like AIG that may too come back for more government largess.
But at the end of the day, the government could create a new class of shareholders, a.k.a. U.S. taxpayers, who will have an opportunity to profit from any upside. That's instead of the current situation of average Americans being stuck subsidizing those who took the risk of investing in Citi and other firms, and are benefiting from (if not overtly advocating for) the grotesque philosophy of privatized gains and socialized risks.
******************
I like the thinking, but I find it hard to believe that this will actually happen
m22au, I think I spoke too soon
paulson might have very well changed the bailout policy entirely and is avoiding to wipe out C and others simply because it would discourage capital from coming at ALL tarp banks.
If C gets crushed ala FNM then investors could be leery of putting money in any bank that might need to tap the government
paulson might have very well changed the bailout policy entirely and is avoiding to wipe out C and others simply because it would discourage capital from coming at ALL tarp banks.
If C gets crushed ala FNM then investors could be leery of putting money in any bank that might need to tap the government
http://www.thestreet.com/_yahoo/new...58265.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
interesting story. The common equity appears to be purely an option. I can't see how this guys are gonna make money. I have no position in C but I find the fact that it still floats above water amazing.
interesting story. The common equity appears to be purely an option. I can't see how this guys are gonna make money. I have no position in C but I find the fact that it still floats above water amazing.
"Some $850 billion, or 45%, of Citi's whittled-down $1.9 trillion worth of assets will be allocated to Citi Holdings. The company will look to sell or spin off these troubled assets and riskier operations, including Citi's asset management and consumer finance segments, CitiMortgage and CitiFinancial, as well as a pool of about $300 billion in mortgages and other risky securities that the government agreed to backstop late last year. "
WTF? .10 cents on the dollar sounds like a lot, bet there's some grade A paper in there.
WTF? .10 cents on the dollar sounds like a lot, bet there's some grade A paper in there.