This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Citigroup: Financial Winner

Stocks in this article: CFNMAFMCCI:BKX

NEW YORK ( TheStreet) -- Citigroup (C) was the winner among the largest U.S. financial names on Monday, with shares rising over 3% to close at $29.98.

FBR analyst Edward Mills on Monday said that contrary to the U.S. Treasury's assertion that its new requirement for Fannie Mae (FNMA) and Freddie Mac (FMCC) to fork over all profits to the government, in order to "support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market," The Treasury has ensured the two mortgage giants' dominance of mortgage finance.

Mills said that although the Fannie and Freddie are forced to reduce the amount of loans they hold in their portfolios, the government's action "does not limit the amount of loans that Fannie or Freddie can guarantee," and that "nothing in this agreement reduces the dominance of Fannie and Freddie in the securitization of conforming loans."

The analyst added that the Federal Housing Finance Agency -- which took Fannie Mae and Freddie Mae under conservatorship in 2008, costing U.S. taxpayers over $189 billion as of June 30 -- "has begun contract harmonization and a unified securitization platform," and that "the more standardized the product, the more likely the vast majority of loans are securitized through the GSEs," which benefits "originators with economies of scale, such as the large national lenders," including Wells Fargo (WFC), JPMorgan Chase (JPM), U.S. Bancorp (USB), and PNC Financial Services Group (PNC).

The KBW Bank Index (I:BKX) rose slightly to close at 47.38, with only nine of the 24 index components showing gains, including Bank of America, which rose 2% to close at $8.15, and JPMorgan, which was up 1% to close at $37.37.

Citigroup's shares have now returned 14% year-to-date, following a 44% decline during 2011.

The shares are trading for a low 0.6 times their reported June 30 tangible book value of $51.81, and for 6,6 times the consensus 2013 earnings estimate of $4.54, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $4.09.

JPMorgan Chase analyst Vivek Juneja has a neutral rating on Citi, "as increased capital return in 2012 had been a key catalyst for the stock and the Fed's refusal to approve Citi's capital return plan and Citi's decision to not ask for return in the resubmission pushes this out to 2013."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,195.42 +221.11 1.30%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,566.1380 +16.9120 0.37%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs