Lampert Sparks Hope for a Citi of Dreams

Lampert's spokesman declined to comment for this story, but at just 0.3% of Citi's shares outstanding, his stake is relatively small for an activist to gain much traction. Furthermore, while Lampert has been an active investor in the retail sector, most notably serving as the architect of Sears Holdings(SHLD Quote), he has no history of waging proxy fights or the like.

The so-called Guru of Greenwich has held his position in Citi for more than a year. He initially took a position in the company in the first quarter of 2006, but the Securities and Exchange Commission granted his fund confidentiality on the stake for all four quarters of last year. That confidentiality treatment, which has also been granted in certain situations for investors who can move the market, such as Berkshire Hathaway's (BRK.A Quote) Warren Buffett, expired on Tuesday.

According to the filings, Lampert boosted his stake in Citigroup in the first quarter of 2007 by 40% to 15.2 million shares from 10.9 million at the end of last year.

Cutting Costs at Fat Citi

While Lampert's motives are unclear, Citigroup does have issues that fit the bill for him to come in and shake things up. The most prominent is the company's bulging expense line, an issue Citi CEO Chuck Prince has been criticized for failing to address.

Coming in and slashing bloated costs, meanwhile, is Lampert's modus operandi.