October 26, 2007: Citigroup, not much to like, but....

LESS OF THAT






MORE OF THIS



Once in a while, I will focus on a stock or two. For this post, Citigroup (C) is my stock.

Citigroup (C) is a stock many love to hate. Its basis revenues were down 14% quarter to quarter. Expenses are pretty high compared with other quality financials. Operating margins are pathetic in most areas, especially consumer finance, consumer lending and retail. Poor performance in credit issues worldwide are alarming. The share repurchase plan is likely to be dormant. And then, there is the management. My God, the management! Watch Cramer every time some innocent novice mentions Citigroup. He explodes. And who can blame him?

A relatively short time ago, I mentioned that I thought Citigroup a buy at $44.00/share. It is now flirting with $41. My cost basis is $45.75 (yes, I bought a chunk several days ago -I was trying to catch a falling knife, it appears).

Of the twenty five independent research firms covering Citigroup according to the Jaywalk Consensus, sixteen have a hold to strong sell rating on the stock. Looking at the nine who have a "buy" or "strong buy" on the stock, I can only assume it is on a valuation basis.

I AGREE with the minority. On a valuation basis and looking at the fifty-day moving average, Citigroup is oversold and, with that great over 5% dividend, an excellent choice for the current market situation. IF, IF, IF, the Board of Directors get smart and gives the axe to current upper management and brings in a fresh, productive team to enhance shareholder value, the stock could double even under mediocre market conditions over the next two years.

I can understand why many hate Citigroup. But I think that the value of this franchise, appropriately managed, could be a big winner for the patient investor who is also being rewarded with a fat dividend to boot.