Gov't Struggles to Unload Citigroup
Breaking up is hard to do. At least that's what the Treasury is discovering in their efforts to divest the taxpayer of their stake in Citigroup (NYSE:C). Thanks to a summer of anemic trading volume, it looks like they're going to miss their year-end deadline to unload the entire stake, and may have to change gears and register a secondary offering for the remaining shares.
The Treasury can't dump the remaining 17% of the company without crushing the stock, and they enter a blackout period on Friday where they're not allowed to sell any shares until Citigroup's quarterly numbers are released. It's a problem for both the Treasury and for Citigroup, who would like to put the government's involvement in their rear view.
Citigroup stock have slowed way down in July and August ... The US Treasury will not finish its share sale by ... the end of the year," said Linus Wilson, a professor of finance at the University of Louisiana. "The only option for the Treasury if it wants to exit Citigroup before the year-end seems to be to conduct a large secondary offering of the stake.""The sales of
How do you think a secondary offering of the government's stake in Citigroup would be received by the market? I'm thinking it would work out fairly well, and would be a great benefit to Citigroup going forward. That's assuming they've gotten their act together and aren't going to need more taxpayer life support in the future.
Overall, the government has made pretty good money on their stake in Citigroup, which is unfortunate because it sets a dangerous precedent. They'll be less hesitant to step in and bail out the next POS bank that's going tits up, because they'll be able to point to Citigroup and say, "Well, look how well that worked out."
Do we have any Citigroup buyers out there? Depending on when you got in and out, you could have done well with the stock this year despite its being range-bound between $3 and $4. Anyone know of any compelling reasons to build a position in Citigroup while it's this cheap?