Redscape - View topic - Would you buy shares of C or BAC today?

Would you buy shares of C or BAC today?

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Yes, Prime Minister
Adjutant

Thu Dec 25, 2008 2:34 pm

While we have seen great damage done to the financial industry, the giants such as Citigroup (which I call $@#!) and Bank of America have survived, albiet with a few black eyes here and there.

Would you touch Citigroup (C) shares at $6.78 or Bank of America (BAC) shares at $13.53? That's a dividend yield of 9.8% and 10% respectively.

_________________
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
---Adam Smith

posts: 475 | location: Sykesville, Maryland, USA | joined: 09 Sep 2006

geojanes
Dignitary

Fri Jan 02, 2009 10:24 am

I wouldn't count on Citi's dividend being there for long. Remember, this is a bank that very nearly failed 5 weeks ago, if not for an emergency weekend cash infusion on top of the 25B they already got. If a loan or dilution of equity, it's going to permanently affect the organization. I could see Citi selling off its insurance business and becoming much smaller.

BAC is a different story. They actually have been making money. Their purchase of ML, while perhaps overpriced, will transform them from a largely retail concern to a much more diversified investment concern. Both C and BAC trade at a large discount, like most banks, from their previous values, but BAC is growing into areas where C is shrinking, and making money doing it. Nevertheless, I'm staying away from the whole banking sector for now. Too many unknowns.

posts: 1290 | location: New York, NY | joined: 01 Oct 2000 | medals: 2

Yes, Prime Minister
Adjutant

Fri Jan 02, 2009 9:27 pm

If BofA is going to survive and it's share price is down to $14, I would sure as hell buy it...too much of a bargain opportunity to pass up. Might take years to come back up, but, hey, I'm only 30. Pity I don't have any extra cash lying around Sad

Interesting how people drop stocks like they're hot when they're down, and consider them "safe investments" when they're way overvalued. Almost seems like the opposite of common sense. Not meaning you, geo, but most investors that is.

posts: 475 | location: Sykesville, Maryland, USA | joined: 09 Sep 2006

Pigmalia
Dignitary

Sun Feb 22, 2009 2:03 am

Yes, Prime Minister wrote:

Would you touch Citigroup (C) shares at $6.78 or Bank of America (BAC) shares at $13.53? That's a dividend yield of 9.8% and 10% respectively.

How funny, let's take a look at these less than two months later.
Citigroup closed on Friday 2-20-09 @ $1.95
Bank of America closed @ $3.79

That's a 71% loss of equity!

Good thing YPM you didn't have money to play with these.

I'm watching them now for a quick trade. There's a lot of pressure on them with talk of nationalization. If I was convinced the nationalization pressure was off I'd consider trying to catch a quick bounce, but no way would I hold them over any weekend, and no way would I consider parking money there long term. If you're right on this kind of trade you'll make 10%+ in a day, and if not you've got to cut your losses and get out.

As GeoJanes pointed out, BAC is the one that looks good on paper, see key statistics. It screams out 'Buy Me'. I've never seen such astronomical paper value in a company that size. Of course none of that matters if Geithner can step in and seize them on a whim anytime he wants. If he wanted he could liquidate the shareholders and pay Footlocker to take over the whole thing. Such is the privilege of absolute power.

_________________
“I enjoy crushing bastards.” Assange

posts: 4734 | location: Autonomous Inland Empire - Occupied | joined: 02 Feb 2006

Rewind
Ambassador

Sun Feb 22, 2009 5:18 am

If a company goes bankrupt or gets nationalized, then it doesn't matter if the stock price is $200, $20, or less than $2, the end result is the investors get $0 (or close to it). Unless you are lucky and some other company takes it over. I was just watching a documentary on Frontline (PBS show) that talked about how at the beginning of the economic crisis, J.P. Morgan took over the failing Bear Stearns. Bear Stearns stock had a high point of $171 a share. It had fell to $57 a share. J.P. Morgan bought it for $2 a share. I bet now the investors at Bear Stearns are happy they got anything at all. Smile

This is a show worth watching if you have not seen it yet:

http://www.pbs.org/wgbh/pages/.....down/view/

posts: 4508 | location: Ann Arbor, Michigan USA | joined: 01 Apr 2001 | medals: 4

Machiavelli
Emissary

Sun Feb 22, 2009 9:03 pm

You would have to be out of your mind.

_________________
Give strong drink unto him that is ready to perish, and wine unto those that be of heavy hearts. Let him drink, and forget his poverty, and remember his misery no more.

Proverbs 31:6-7

posts: 7114 | location: God's Country - Texas, USA | joined: 16 Feb 2000 | medals: 1

Pigmalia
Dignitary

Tue Feb 24, 2009 3:16 pm

Machiavelli wrote:

You would have to be out of your mind.

Apparently it was just crazy enough to work. A quick in and out on BAC would have yielded and 21% gain today.

posts: 4734 | location: Autonomous Inland Empire - Occupied | joined: 02 Feb 2006

Rewind
Ambassador

Tue Feb 24, 2009 5:15 pm

Financial companies right now are like a day at the race track. You might get a lucky day, or then again, your horse might be turned into glue. Smile

posts: 4508 | location: Ann Arbor, Michigan USA | joined: 01 Apr 2001 | medals: 4

geojanes
Dignitary

Wed Feb 17, 2010 8:25 am

Machiavelli wrote:

You would have to be out of your mind.

Had you invested in BAC the day Machiavelli wrote this you would be sitting on a 308% gain today. C would have given you just 73%. Either way we have a little support to the axiom, "Buy when there's blood in the streets."

posts: 1290 | location: New York, NY | joined: 01 Oct 2000 | medals: 2

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