Wednesday, May 26, 2010

Citi Bank Stock

My financial expert and next door cube mate, Phil, has suggested I buy Citi Bank stock. For some reason he has become under the assumption buying up a partially government owned bank is advantageous.

In a moment of obvious weakness, he somehow committed me to buy in if he bought in. He bought in. This leaves me committed to buying a bank stock of which I know little about, other than they own my house.

Earlier this week I assured him I would get in, but only at the right moment. That moment being a combination of market price and wife approval. Waited on average of personal suffering.

In prepping for my spousal conversation, I did some research in Citi. They loss $52 billion in 2008 and $7.8 billion in 2009. Losing less is better I guess. The reports I looked at didn’t show operating income/loses. Maybe because they’d be embarrassed to show it?

More interesting is they went from having 5.5 billion shares outstanding in 2008 to 28 billion in 2009. Meaning, that baby is watered down.

My guess is the government owns most of those extra shares and they will want to ditch them at some point. My shaky finance leads me to believe that if the government sells them to the open market, the price could have negative pressure (more supply, lower price). However, if Citi buys them up themselves, then the price will go up.

Thoughts? Are you buying in with Phil and a committed me?


bosshart said...

I think Cramer reads your blog.

Mac Noland said...

Maybe Phil and Cramer share, I mean yell, stock tips with/at each other.

Are you buying in?

bosshart said...

Nope, I buy index funds. I leave buying stocks to people who know what they are doing... like Phil.

Chris said...

You hit the nail on the head pointing out how many shares they had to issue. That's the main reason I wouldn't but C. You may have seen by now, but the govt sold 20% of their C stake this week for $6.2bn.

Chris said...

I can't guarantee it won't go up. I just can't imagine wanting to buy enough shares that it'd require approval from the wife.