Comments on: How the Citi stock offering flopped http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: waveonshore http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/comment-page-1/#comment-10170 Fri, 18 Dec 2009 13:28:25 +0000 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/#comment-10170 Having recently closed out a car loan with Citi I would like to comment on the very poor internal organization of this bank. I closed the loan and for 6 – 8 weeks continued to receive invoices, overdue notices and requests for payments that were not required. My comments met with responses from various departments that were always the same… it takes time for us to hear from other departments and make adjustments. I have never experienced such complete and total disorganization in a bank before. If Citi wants to become profitable, perhaps they should improve internal efficiencies and offer good customer service!

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By: offpeak34 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/comment-page-1/#comment-10155 Fri, 18 Dec 2009 00:45:54 +0000 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/#comment-10155 Very good post Felix. You make an excellent point about the reality of bank valuations right now–many are largely based on pure speculation. The government guarantee against failure helped boost the price of Citi’s shares by removing a degree of risk for shareholders–everyone knew that bankruptcy was not an option–and providing the “heads I win, tails I don’t lose” moral hazard incentive for the bank to place bets with equally obscene levels of risk and reward. As a member of the Too Big to Fail Club, Citi could engage in risky endeavors knowing the U.S. government would backstop any losses.

Knowing this, speculative demand for shares led to prices disproportionate to the fundamentals of the company’s balance sheet. Bailout speculators were simply betting on the government guarantee resulting in a vivacious and healthy bank down the road, with minimal downside risk, when in reality the company continues to face considerable headwinds.

http://blog.t3live.com/2009/12/financial s-continue-to-weigh-on-market.html

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By: najdorf http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/comment-page-1/#comment-10153 Thu, 17 Dec 2009 23:12:48 +0000 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/#comment-10153 Nice post Felix: it’s good to know that our Treasury is small-realized-loss-averse like an 18-year-old day-trading in ’00. I’m sure that if I keep holding these shares of Pets.com I’ll be back to even soon!

The difference between BAC/WFC and C is that they have acquired earning assets cheaply (ML brokers and Wachovia branches, respectively) and held dilution down while Citigroup has diluted massively and sold earning assets at terrible prices (Smith Barney and Phibro). The fact that ML and WB both had terrible balance sheets doesn’t outweigh the fact that the franchises are hugely profitable going forward and BAC/WFC have as much funding as they need. Of course the best from this perspective is JPM, which diluted least, bought two cheap assets, and isn’t run by morons.

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By: drdubious http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/comment-page-1/#comment-10148 Thu, 17 Dec 2009 20:52:54 +0000 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/#comment-10148 Perhaps it is the “greater fool theory”: The people who paid the inflated prices of WFC and BAC were the greater fools?

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By: vgps http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/comment-page-1/#comment-10137 Thu, 17 Dec 2009 18:22:23 +0000 http://blogs.reuters.com/felix-salmon/2009/12/17/how-the-citi-stock-offering-flopped/#comment-10137 You mean share holders of WFC and BAC are fools to accept the offers. I don’t see any difference between these couple to Citi. Anyhow everybody are surviving with a Zombie called Fed.

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