For the past few weeks, Citigroup (C) shares has been nose diving and it seems that the time to buy its shares at a bargain is coming soon.
Take a look at Citi’s 10 year price history :
Its hit its 52 week low of 17.99 in March this year, and the stock, currently trading at 21.12 seems a bargain when you consider that its 52 week high is 55.53
In addition, when you look at Citi’s SEC fillings, the bullishness of insiders also makes it an even more compelling case.
LIVERIS ANDREW N, of director of Citigroup (and also CEO and Chairman of The Dow Chemical Company), purchased 1,200 shares at $23.47 on 05/13/08
FORESE JAMES A, an officer, sold 100,000 shares at $25.79 on 04/24/08
MEDINA MORA MANUEL, an officer, bought 185,000 shares at $27.01 on 01/24/08
“Wait! What about the write downs due to the subprime crisis, and Citigroup’s decision to shed $400 billion assets?” , you may wonder.
The fact that Citigroup is the world’s largest bank ensures that there is a low chance that the Fed will allow Citi to go bust on its own (Or else the US economy will suffer badly)
Also, Citigroup’s total assets is worth trillions, so $400 billion isnt an amount that can stop it from being the biggest bank.
Being one of the Dow 30 Components that make up the Dow Jones Industrial Average further enhances this “invincibility” aura that Citigroup seems to carry.
Of course, after Bear Stearn’s fall, anything is possible, but chances of Citigroup shares hitting $2.00 are extremely low, while there is a huge upside potential given that banks are now slowly recovering from the write downs
Nevertheless, I will still be waiting for Citigroup shares to fall further, perhaps to $15.00 before I consider investing, as a recession might be coming. It wont be long before Citigroup shares reach a bottom and that will be the best time to buy an undervauled stock.
