'Fast Money' Recap: Citigroup Play

NEW YORK ( TheStreet) -- The markets closed higher again Wednesday as shares of Citigroup ( C) and AIG ( AIG) surged.

The Dow Jones Industrial Average rose 2.95, or 0.03%, to 10,567.33, while the S&P 500 moved up 5.16, or 0.45%, to 1,145.61. The Nasdaq was up 18.27, or 0.78%, to 2,358.95.

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Pete Najarian said on CNBC's "Fast Money" TV show the options activity in Citigroup and AIG soared today as investors piled into the two stocks.

Guy Adami said the move in AIG, which was up 10.6%, was due entirely to a short squeeze and warned investors to get out of it on Thursday.

Joe Terranova said Citigroup was the one stock in what he called the "Treasury portfolio" that one could invest in for the long term for fundamental reasons.

Melissa Lee, the moderator of the show, said the cost of shorting 100 AIG shares jumped to $3 a day.

Brian Kelly called Citigroup a "different animal" than AIG because it is a real company, now that it is selling off its parts, has a good commercial bank and has good management.

Lee disagreed strongly, saying that Citigroup CEO Vikram Pandit has shortchanged shareholders with its actions on the dividend and sold off Citi's assets at the market lows.

Steve Cortes said the financials had been too frothy and took some profits on these stocks, including Goldman Sachs ( GS), which he said was up 10% in March alone and "looked a bit extended."

Gary Kaminsky said he had spoken earlier in the day with a "senior person" at Citigroup and came away with a sense of its game plan. He said Citigroup has to deliver an earnings surprise and a reverse stock split to attract institutional investors. He said Citigroup is not big enough as a standalone entity to compete with other global banking players like Deutsche Bank ( DB).

Shifting to M&A activity, Najarian commented on the flurry of deal-making in the commodities space and noted it's going on as well among regional banks like Huntington Bancshares ( HBAN) and Regions Financial ( RF).

Adami said investors should try to get into Greenhill ( GHL) and Lazard ( LAZ), while Brian Kelly touted Evercore Partners ( EVR)

Lee brought in Brad Hintz, an analyst with Sanford Bernstein, who wrote a report suggesting that Goldman Sachs would have done well between 2002 and 2007, if it had been under the proposed Volcker Rule. In effect, he said, it would have been a "giant" Evercore, with 17% revenue growth and 16% return on equity.

He said Bank of America ( BAC) is good shape, with a powerful franchise in the capital markets and debt and equity underwriting strength.

Lee brought in Anthony Scaramucci, founder of Skybridge Capital, to comment on reports on attempts to put new limits on credit default swap trading of government debt.

Scaramucci said that would be a dangerous move because a healthy market needs speculators.

Lee noted that iShares Nasdaq Biotech ( IBB) hit an eight-year high. Najarian said the biotech sector is heating up not only because of M&A activity but because valuations are fair and companies have pipelines and are sending drugs to the market.

Cortes said biotech also doesn't have to deal with the political risks that pharma has to contend with.

Shifting to the tech sector and Apple ( AAPL), Peter Misek, global tech strategist for Canaccord Adams, said the company should see a lift from iPad sales as early as next quarter.

He also said he liked Research In Motion ( RIMM) and would buy it "with both hands." He said the carriers need RIM for its low-cost models, new browser and new operating system. "There's a lot of momentum" in this stock, he said.

Shifting to gold, Scaramucci said he feels is gold is overbought. He said his company is shedding gold bullion and may build a short position in the precious metal.

He said the inflation isn't a threat because of the lack of wage growth, adding there is an excess of manufacturing capacity in the country.

With gasoline prices at a 17-month high, Terranova liked the refiners such as Valero ( VLO). He said the higher gas prices would be rough on consumers and suggested a pairs trade: long Select Sector: Energy SPDR ( XLE) and short Select Sector Consumer Discretionary SPDR ( XLY).

In a telephone call from Istanbul, Tim Seymour said investors should buy iShares MSCI Turkey ( TUR) on weakness as the country sorts through its political troubles.

In the final trades, Terranova said he liked the refiners. Adami liked Yum! Brands ( XLY) while Kelly liked Dell ( DELL). Najarian liked F5 Networks ( FFIV).

-- Written by David Tong in San Francisco

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