Is Citi Stock A Buy Now?
I heard the news this morning that Citigroup CEO Vikram Pandit bought 750,000 shares of Citigroup stock (C) on the open market yesterday when the share price dropped below $9. In addition to CEO Pandit, other three executives also bought a total of 550,000 shares. Is this the sign of confidence?
Currently trading slightly above $9 per share, Citigroup stock has been hit very hard after the world’s biggest bank by revenue had to write-down billions of bad loans. Since the credit crisis began more than a year ago, Citigroup has lost at least $13 billion and slashed tens of thousands of jobs (Citi announced it’s cutting another 10,000 works worldwide). Comparing to its major rivals, Bank of America (BAC) and JPMortgan Chase (JPM), Citi stock has the worst one-year performance, down more than 70%.
When I looked at the bank dividend yield nearly half a year ago, Citi was pretty impressive when the stock was traded twice as much higher as its current price. The dividend yield, 6.60% at $0.64 per share, is till very good (as long as they don’t cut it). At least that’s a little bit comforting for owning the stock (Why? If you reinvest the dividend instead of taking cash distribution, you can buy more shares when the price is low and you will be rewarded if the stock recovers later).
So, do you think Citi stock is a buy at the present price level? Or you want to wait a little bit to get into the banking sector?
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Update: I eventually bought 600 shares of Citi, at a much lower price of $1.05 a share with Scottrade (open a Scottrade accoutn and get 3 commssion free trades).
Update (January 5, 2011): Barron’s had an article, Citigroup Q4 Could Make or Break the Bank, recently which said that:
Citigroup’s (ticker: C) fourth-quarter-earnings report has the potential to decisively push the stock above $5, or sentence the $4.85 stock to that murky area of penny stocks that is picked over by hordes of individual investors, and needed by hedge funds and others sophisticates making big bets on stock gyrations.
Maybe the buying opportunity is coming back again? I certainly don’t want to see the stock become a penny stock again.
Update (March 21, 2011): Citi announced that it will do a 1:10 reverse stock split and pay dividend in the second half of the year.
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