The Prince and the Citi
Saudi Prince Alwaleed bin Talal, Citigroup's largest individual investor, plans to boost his stake in the U.S. banking giant to 5% from less than 4%.
The prince believes shares are dramatically undervalued and will invest at least $349 million in the company to boost his stake. The company has lost $20.3 billion in the last year and taken tens of billions of dollars of writedowns on mortgage and other toxic debt.
The market has been hard on Citigroup shares, dropping them below $7 in trading yesterday. A huge concern may be the size of consumer credit losses in the first half of 2009. It appears that investors are betting that Citigroup will need further financing to turn its fortunes around.
The company had opportunities to sell shares in a secondary at higher levels several months ago, but failed to take advantage of the opportunity then. Another dividend cut may be needed, or perhaps the company will just have to eliminate the payout entirely. We'll have to wait and see.
Citigroup is not recommended at this time, holding a Dividend.com Rating of 2.8 out of 5 stars.
Men's Wearhouse Profits Wrinkled
reported late Wednesday that its third-quarter profit fell 61% to $14.6 million, or 28 cents per share, down from a profit of $37.1 million, or 69 cents per share, a year ago.
The company missed EPS by 2 cents as sales dropped 10% to $459.7 million from $512.1 million. The company's bright spot was that tuxedo rentals, which represent 20.99% of fiscal third-quarter sales, did increase slightly.
As for the company's outlook, it now sees full-year EPS of of $1.04 to $1.22 per share, below the consensus estimates of $1.25 per share.
We have avoided shares of MW since our early June coverage began, and the stock was trading at $19.80. The company has a 2.89% dividend yield, based on last night's closing stock price of $9.68. The company is near a $9 support level and will need to hold.
If not, it may head toward the next level of support, which is near $6 a share. We would look elsewhere at this time for better investment opportunities.
Men's Wearhouse is not recommended at this time, holding a Dividend.com Rating of 2.9 out of 5 stars.
Dick's Sporting Goods Reports a 40% Drop in Profit
Dick's Sporting Goods
just reported its third-quarter profit fell 40% to $7.4 million, or 6 cents per share, compared with $12.2 million, or 10 cents per share, a year earlier.
Same-store sales during the quarter fell 2.8%. The company did see revenue gain 10% to $924.2 million from $838.8 million on the back of its November 2007 acquisition of Chick's Sporting Goods, as well as new store openings.
As for next quarter, the retailer is looking for EPS in a range of 49 to 56 cents, below the consensus estimates of 62 cents.
The company is down near some near-term technical support of $9. If that fails to hold, the company may need to test the $5.50 level, not seen since its late 2002 IPO. We would prefer to look at shares of
for investment exposure in the sporting goods part of the market. We do not have Nike on our "Recommended" list at the moment, but it is a name we like if the markets can stabilize.
Dick's does not currently pay a dividend.
Nike is not recommended at this time, holding a dividend.com rating of 3.4 out of 5 stars.
Eddie Lampert Increases Stake in AutoNation to 44.5%
Billionaire investor Edward S. Lampert has increased his stake in
where he is already the company's largest shareholder.
A recent filing shows the investor purchased 228,700 shares for between $5.90 and $6.15 per share. The company, which operates 245 dealerships in 16 states, just reported a $1.41 billion loss for the third quarter.
Is this another case of throwing good money after bad? The stock is approaching a key $5 level, which it has not seen since 1992. In this turbulent environment for the entire auto industry, we think the averaging-down move here carries significant risk. Lampert also has a big stake in
, so we'll see if he decides to raise his stake there as well. Sears closed at $28.60 yesterday, which is way down from all-time highs of $192 hit last April. This story will likely get more interesting in the coming weeks, as the resolve of this billionaire investor will certainly be put to the test.
AutoNation and Sears Holdings do not currently pay a dividend.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.