What to do when your $3 billion worth of Citigroup (C) gets whacked

Posted Nov 11th 2007 4:10PM by Zack Miller
Filed under: Citigroup Inc. (C)

Well, I have to admit that this is not a problem I'm suffering from.

Don't get me wrong: I have plenty of problems (many of them exacerbated by this bearish market we're slogging through), but my direct exposure to Citigroup (NYSE: C) is quite limited.

This is a problem, however, from which super-investor Prince Alwaleed is suffering. Billionaire Saudi Prince Alwaleed bin Talal is actually Citigroup's largest individual shareholder with an almost 4% stake in the global banking monolith. With Citigroup's stock swooning, Alwaleed's holdings have seen some major volatility.

Interestingly, he is still quite positive on the stock, at least publicly. In an interview this week, Alwaleed said, "I want to make it clear that I fully support the leadership of Citigroup and think it is a very strong company with a good future."

I dunno -- crises come and go, wars are waged, and over-leveraged hedge funds (read LTCM fiasco) blow up and the world's bank, Citigroup, marches on. Alwaleed seems O.K. with the whole thing -- he claims his purchase price, adjusted for dividends and stock splits, works out to be almost $3 per share.

I'm not shedding a tear for this billionaire. But I have to admit that I'm a little miffed.

BloggingStock's Sheldon Liber mentioned last week that this market is trading down because of a lack of integrity. I tend to agree. The banks keep coming out and marking down their books with billions of dollars of losses. Losses that result in a takedown of shareholder equity.

Look, Etrade Financial Corp (NASDAQ: ETFC) just did it again on Friday, after having been surprisingly candid about what its portfolio looked like.

I know the individual investor frequently gets shafted, but via greater visibility into others' portfolio moves and great sites like BloggingStocks, we're now investing alongside some of the great investors. In addition to Alwaleed, Citigroup has a stellar roster of shareholders, including hedge fund kingpin Eddie Lampert. BloggingStocks' Doug McIntyre had a good profile on Lampert's position in Citigroup last week.

Let's hope that these uber-investors and their money and influence can not only help clean up this mess but also help assure investors that the risk of off-balance sheet holdings will be better accounted for in the future.

Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC., the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. He holds no position in C as of 11/10/07 but his clients may buy or sell a holding in C at any time.

Tags: c, citigroup, etrade, finance, investing, subprime, writedowns

Print this

Reader Comments (Page 1 of 1)

11-11-2007 @ 4:49PM

Jjjaaazzzyyy said...

What did you think he would say publicly? I'd be more curious to what he says or thinks away from the cameras and microphones, but that we'd never hear. Did you think he'd say, man these stocks really stink but if I unload them now I'll lose out? Did you think he'd tell you he's shaking in his shoes? LOL. I'm sorry but I don't think a major stock holder is going to let you see him sweat.