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Citigroup (NYSE:C) bailout hands us huge profits

Today's Financial News - Posted November 24, 2008

As I told you on Friday, the markets always fix their mistakes. This time it took a little help from Uncle Sam, but Citigroup (NYSE:C) is jumping this morning and our position is up by nearly 60%.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore—(TFN): We are starting the week with some positive news and big-time profits in our pockets. It is all thanks to our interventionist friends in Washington and their uncontrollable addiction to meddling in corporate America.

While I am no fan of a government artificially propping up a business and flattening the wheels of a free market, I am an absolutely huge fan of making money. Thanks to Washington’s latest bailout, Citigroup (NYSE:C) is soaring this morning.

As I told you on Friday, Citi’s share price would not stay below the four-dollar mark for long. When I recommended buying shares of the company in the afternoon, shares were trading for $3.77. In pre-market trading this morning, they are going for $5.91. That is a gain of 57% in less than 24 trading hours.

As soon as the market opens, hit the sell button and lock in those profits.

While I think Citi will survive this mess, its common shareholders will not benefit from today’s news. The government is now a major owner of the company – to the tune of $20 billion – and it gets first dibs at any profits. The quarterly dividend for common shareholders is limited to just one cent per share for the next three years, while Uncle Sam gets 8% of its investment back.

Remember, when Citi stopped trading on Friday, it had a total capitalization of $20 billion. This weekend, the federal government added $20 billion in equity. That is a lot of dilution that will ultimately hurt the common shareholders.

We made our money. Congratulations. Now let’s get out of this monster and lock in those gains. There is money to be made elsewhere.


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Posted by Andrew Snyder · Filed Under News that Matters, US Stocks and Markets 

2 Responses to “Citigroup (NYSE:C) bailout hands us huge profits”

  • SmarterThanYou Says:
    November 28th, 2008 at 6:26 pm

    Great job. You can't spell - there vs their - and you missed out on the upside from $5 to $8.

  • Sayah FRITES Says:
    November 25th, 2008 at 5:00 am

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