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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerAn analyst who follows Citigroup (NYSE: C) believes that the financial services company will sell it Primerica division. The operation provides customer life insurance and investment products including mutual funds.
According to Reuters, Ladenburg Thalmann analyst Richard Bove said, "Primerica does not fit into Citigroup Chief Executive Vikram Pandit's goals of making the bank an international company across business lines." Bove thinks that Primerica could bring in over $7 billion.
Pushing Primerica out the door does not address Citi's core problems. Pandit has said he will cut costs across the company by 20%. If selling off revenue reduces those costs, it hardly helps the bank's margins. It's really not expense reduction at all.
At the center of Citi's troubles are its mortgage-related securities portfolios, LBO debt, credit card business, and slowing revenue into its investment banking operation. There has been no clear sign that Pandit plans to take tremendous costs out of these operations that are critical to the bank's recovery.
Fixing Citi does not involve selling a life insurance company.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-13-2008 @ 11:49PM
Trader said...
It suprises me to here that selling one of the largest life insurance company in America doesnt seem like a really big deal.
Well.... when capital is so scarce today, when you have financial companies dropping out every week, when theres no money out there,Firms trying desperatly to raise capital you suggest that 7.5 billion for primerica is not a big deal to Citi if they were to sell it. Wrong! totally Wrong!
If primerica would be sold at those levels it would be almost 8% of citi's market cap. that would give people a little taste of what Citi's got in there pockets. It would show they have alot of Amo.In todays market, with the conditions that we are in if they got a 7.5 billion for primerica its kind of a big deal, its Huge!
Lehman Brothers with all there lines of business, all investments and assets wich includes alot of bad Debts and Real Estate is rumoured to get about 5 to 6 billion. Primerica if it were to be sold at that price you quoted would be a quarter of what Merrill Lynch and almost a quater of what AIG is valued at in todays market
Citigroup is holding a strong hand with Primerica and if sold at the figures reported you would see a strong move to the upside in Citi's shares aswell as other Insurance companies not related to bad debt or bad credit on there balance sheet.
The numbers are the numbers. Should be interesting to see what announcements, moves, or mergers come out from the big firms in the upcoming weeks. It seems like we are in the fourth quarter and time is starting to wind down. No more time to carry the ball its time time for a big play! and selling any company for 7.5 Billion is a Touchdown in todays Bear Market.
By the way..... are you that guy that advises Jim Cramer on CNBC..
Think? smarter...
itradesmarter@yahoo.com