A Three-Handed Deal for Citigroup

Citigroup's (C - commentary - Trade Now) not quitting and logically you have to ask yourself, "Why should it?"

With sovereign funds swirling, mortgages getting better -- sorry, they have -- and credit card losses peaking, why the heck shouldn't it be going toward book value of $5.75? Why should it be the only bank at this kind of discount given its worldwide franchise?

Why shouldn't someone just take the government out of its stake at a huge profit? Send the money over to the FDIC if you have to!

I have pushed this stock for more than a dollar now and I always have to remind myself no matter what the rally, that until Citigroup gets to $5.50 it isn't expensive vs. some really awful regionals out there. Given how far the banks have moved, you have to understand that this is the great catch-up play, the real call on a turn in the worldwide economy -- only 50% of its business is in the U.S.

Beginning Sept. 10 the government's stake is for sale. Will it dribble? Will it do shelf after shelf or will it take its profit and run? I think the latter, which means that the biggest block of what could be a fantastic bet will be on sale. Among Fidelity (FNF - commentary - Trade Now), John Paulson (the guy with the big Bank of America (BAC - commentary - Trade Now) stake) and Prince Alwaleed -- worked once -- the three-handed deal will be spoken for.

Which means during the next pullback generated by the new bear market in China -- last pullback -- or criticism by Sheila Bair -- pullback before that -- or controversy over the Hall payments -- the one before that -- you are going to have to make a move to take some down ahead of the three-handed deal I now project will wipe out the entire overhang.

And I am not even thinking about what would happen if the Chinese circle 10%!

Random musings: What does it say that Caterpillar (CAT - commentary - Trade Now) orders are way down for the previous month and the stock is one of the strongest in the Dow. Given that Caterpillar is waiting for housing and infrastructure orders, it says they are about to happen....

At the time of publication, Cramer was long Bank of America.

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