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The free-fall in the shares of Citigroup Inc (NYSE: C) have been breathtaking. I've been thinking of picking up some -- but, then, somehow the stock goes down even further.
Yes, it's usually not a good idea to catch a falling knife.
But have investors overdone things?
Perhaps so -- at least according to a piece in Barron's [a paid publication].
Keep in mind that Saudi Prince Alwaleed bin Talal, the biggest individual shareholder in Citi, is a bull. And he's been an investor since the early 1990s (a time when things looked bleak for Citi).
Basically, he thinks investors are in the panic mode. And, no doubt, this could be a big opportunity -- especially for long-term investors.
Interestingly enough, the Prince is also upbeat on Citi's diversification model (often called a global "financial supermarket").
To get some more perspective on things, I actually talked to a marketing/pricing expert, Rafi Mohammed. He is the author of The Art of Pricing and a consultant to major companies.
According to him:
"Citigroup needs to return to the strategy that Sandy Weill was building. Weill wanted to create a superstore that offers a wide variety of financial services. Much like phone companies are doing today (phone, internet, television, and wireless), customers could conduct all of their financial business with Citigroup.
"The stumbling block to Citigroup's bundling strategy was the effort it takes consumers to change financial service providers. Of course, in telecommunications, one phone call can change providers. However in financial services, the paperwork is significant. Citigroup should help customers with this paperwork as well as offer a bigger financial
incentive to make this effort (much like the big discounts wireless companies offer new customers on phones)."
How's that for being a contrarian?
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
11-11-2007 @ 1:42AM
Gene said...
It's about time that the people of United States understand who controls it's economy...the Saudi's do.
Besides the Citi Prince, we have Dubya's relatives too. Why doesn't Dubya ask his Saudi friends to intervene and assist with Irqai?? Oh, no money for them, remember Irqai was the number 2 producer of Oil in the world, so Haliburton, (Dubai Cheney) where is the Oil. How much are you paying for gasoline these days??? Since Dubya has been President gasolione prices have increased almost $2.00 a gallon more. And don't forget all the innocent people killed in the name of OIL.
11-11-2007 @ 10:37AM
Paul said...
Wow, what did any of that even have to remotely do with stocks or financials like Citigroup? There's a conspiracy in everything! Just goes to show that you can make anything into a Bush smear, the problem is that it seldom sticks.
To return to the point, this is a stock that is now trading with a 6.5% yield... not to mention multiple technicals point to oversold. Once Citi is able to assure everyone that their exposure is completely disclosed, then the stock will recover. The long term investors have a terrific entry point here and within the next quarter or so. This company is bigger than bad domestic subprime investments by a long shot.
11-11-2007 @ 8:10AM
michael schneider said...
Tobin Smith recommended Citigroup in this weeks Bulls & Bears show (synopses of all 4 Fox business block shows including Bulls & Bears with 25 stock and fund picks for the coming week are available free right now in the newest- white label by red dot- Weekend Stock Review at http://www.Barrelomoney.com).
Everyone who has jumped back into financials has been too early except perhaps (and it is a very big perhaps) those who bought Friday. There will, of course be a time to buy the financials that will look great down the road. If the market as a whole doesn't come back Monday, I would think the financials will head down again. If the market comes back the financials should continue upward until the next shoe drops.