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?
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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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