Bank Stocks

[clifp]

NCC was a stock I bought in July 2005 because it was a one of the M* Dividend Newsletter recommendation. By the beginning of this year the editor had soured on the company, saying that it was very unlikely for the management to be raising the dividend in the future. IRRC he thought management was to intent on using the money for acquistions and share buybacks.
He recommended selling NCC in the beginning of the year, I took advantage of the company buy back offer to sell my stock back to them at $38. I bet management is to happy about that transaction now. I actually made a modest 17% total return for the 17 months I owned the stock.

I don't buy every stock that Josh Peters the newsletter editor suggests, but when he says sell I pay attention. With NCC $14.50 and a dividend cut, I'd say his advice was well worth the $79 price.

[terminator]

Quote:

Originally Posted by clifp well worth the $79 price.

Is there a discount available?

[clifp]

Quote:

Originally Posted by terminator Is there a discount available?

I lied the price has been raised it is now $129 for members $139 for non members. 30 day free trial offer

[terminator]

Okay, thanks. If I weren't so cheap frugal I'd probably subscribe as I gather from peripheral sources that I own probably about half the stocks on his list. I think I'll see if I can get my library to carry it.

[DJRR]

Citigroup is getting close to its Q3 book value of $25.51. I know a general rule is that banks are attractive when they are priced at book. Any insight into how much they are going to write off in Q4 vs. the dividend vs. the Fed cutting rates vs. new CEO.

Could be a great buy or a good way to lose a few bucks on the way to $19 :confused:

[terminator]

Just an opinion, but I think there are a lot more attractive banks out there than C right now. They would pretty much be at the bottom of my list of banks right now. I sold mine at 44 when I noticed their low capital ratio. I think a lot of other banks have the same upside and less risk . . . and while I am not a superstitious man with the way the market is going now I refuse to say their names out loud and jinx the rest of my bank holdings.

[Dawg52]

Quote:

Originally Posted by terminator I refuse to say their names out loud and jinx the rest of my bank holdings.

Mine are already jinxed. Frigging market.

[Nords]

Quote:

Originally Posted by DJRR Citigroup is getting close to its Q3 book value of $25.51. I know a general rule is that banks are attractive when they are priced at book. Any insight into how much they are going to write off in Q4 vs. the dividend vs. the Fed cutting rates vs. new CEO.

I think that investors are fleeing anyone who has any possibility of even thinking about cutting dividends-- no matter how remote or deluded that possibility may be.

Back after 9/11 I bought shares of Central Pacific Bank (CPF) at $21 and stopped out at $18. I felt pretty bad about it during the subsequent run-up for every financial on the face of the planet, but now they're being hit with the same dividend-cut rumors. They closed at $15 yesterday.

Buying opportunity? Sure. Volatile? You bet. Dividend cut? I'm not going to join the club.

[terminator]

A dividend cut is clearly the most likely scenario. They had to get a $7.5B infusion to get their capital ratios where they should be and they are writing off tens of billions of dollars. They definitely should, and probably will, cut the dividend to conserve their capital. Plenty of better, more secure yields out there than C.

[maddythebeagle]

Funny how some of the bank stocks got lifted with Bofa buying out countrywide.....seems Bofa is just taking a flyer after already throwing good money that way a few month back....

[terminator]

I can't help but think Countrywide must have been in gawd awful shape to accept an offer worth about $6 per share. I would think that unless they were about to file bankruptcy it would be an egregious breach of fiduciary duty to its shareholders to agree to a price on Thursday, January 10th that causes anyone who bought before Tuesday, January 8th to lose money. How would that feel to not even had your trade settle yet and be locked into a loss?

[al_bundy]

on one of the blogs they said that with a lot of the mortgages they sold when the lendee stops paying the servicer is responsible to prepay the principal and interest into the pool during the foreclosure process.

countrywide was probably facing one crazy cash crunch

[al_bundy]

Quote:

Originally Posted by DJRR Citigroup is getting close to its Q3 book value of $25.51. I know a general rule is that banks are attractive when they are priced at book. Any insight into how much they are going to write off in Q4 vs. the dividend vs. the Fed cutting rates vs. new CEO. Could be a great buy or a good way to lose a few bucks on the way to $19 :confused:

how do you know the book value won't go down this year?

[Running_Man]

Quote:

Originally Posted by DJRR Citigroup is getting close to its Q3 book value of $25.51. I know a general rule is that banks are attractive when they are priced at book. Any insight into how much they are going to write off in Q4 vs. the dividend vs. the Fed cutting rates vs. new CEO. Could be a great buy or a good way to lose a few bucks on the way to $19 :confused:

Citibank apparently will write off 24 billion tomorrow and cut their dividend and lay off 20,000 employees sure to warm the heart of every foreign national who will be the proud owner of a large chunk of the company. If that does indeed happen I think that will lower the book value by about $5 per share.

Citigroup Investors - Financials * US * News * Story - MSNBC.com

[clifp]

Morningstar put the range at $11 B to $25 B. Over $21 B in writeoffs would require recapitalization in order to maintain their Tier 1 reserve since it would fall below 7%. Counterparties at its investment bank would begin to view Citi as not creditworthy and force it to renegotiate or unwind contracts.

I am not sure what exactly all this means, but I think deep kimichi is a simple translation.

[terminator]

C:

Dividend cut 41% to $1.28, $18B writedown on subprime/fixed income investments and $4B for U.S. consumer credit losses, $12.5B of outside, foreign capital in the form of convertible preferred paying 7%, will continue selling off non-core assets, and an additional preferred stock offering of $2B.

[twaddle]

Some exciting excerpts from the Citibank conference call here:

http://calculatedrisk.blogspot.com/2...pects-and.html

Basically, it sounds like C is retrenching with expectations of a Big Crunch going forward. I wonder if other banks will follow suit....

[RockOn]

I'm not really a stock guy but bought a little BAC. Come Tuesday we'll see if they cut that 7% dividend.

[DJRR]

Quote:

Originally Posted by Running_Man Citibank apparently will write off 24 billion tomorrow and cut their dividend and lay off 20,000 employees sure to warm the heart of every foreign national who will be the proud owner of a large chunk of the company. If that does indeed happen I think that will lower the book value by about $5 per share.

Looked up the financial statement and the book value is now 22.74 with a $1.28 dividend that would make a 5.6% yield if it gets down to book value or below. I will keep watching.

[James5v]

Good luck on the BAC. I have been thinking of buying some but it keeps going down. At 35.97 the div is 7.1% but who knows if that is a good deal. As you say we will see what they say on Tuesday.