Who is Buying Citi at 0.5x Tangible Book Value?
This one seems like a solid bet to me. Understanding it isn't exactly a growth machine at present, 0.5x TBV seems like a pretty compelling opportunity to buy the book regardless.
What's the bear case against this? Any other deep value plays you like better?
Important to consider the cyclicality of the industry. Also on the cusp of higher reserve requirements which will hurt the banks
I've thought for the past 5 years that they have been cheap or undervalued on a typical BV or TBV basis, however, that has not lead to any sort of outperformance compared to their peers. I'm not saying that the restructuring will have a positive effect on the stock, just that you might be waiting for something that never comes, and perhaps buying another bank with a deserving premium can deliver more upside. Happy to hear other thoughts on this since this has been on my watchlist for a while but I've thankfully never pulled the trigger.
Value vs. Growth in a nutshell. I have an affinity for Shit Stocks so you know where I come out. As I like to say - Shit floats!!!
Thank you ass man.
I prefer tits myself.
BBBY is the true value play - expert market is where deep value lies.
The case against Citi is: 1) they failed to bend the expense curve and have actually seen increasing expenses - management says that they expect the cost curve to bend in the next 6 quarters, but that's already been pushed out 2) industry lagging ROTCE which is highly correlated with P/TBV, 3) outside of TTS, no truly market leading components leading to the firm, having a very low moat, and 4) execution risk associated with winding down the legacy businesses - costs maybe materially higher than expected.
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