Bove Says Citi's (C) TARP Repayment Provides 'No Positives for Shareholders'
C Hot Sheet
Rating Summary:11 Buy, 4 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 19 | Down: 16 | New: 82
Speaking with CNBC's Erin Burnett earlier, Rochdale's controversial banking analyst Dick Bove called Citi's (NYSE: C) TARP repayment news a "sign of strength" as 6-12 months ago, the bank certainly wouldn't have been able to pull this off. In light of this, however, Bove believes the announcement provides "no positives for shareholders" and in fact trades "management's ability to pay themselves more for further dilution." Given this assumption, Bove believes that the interests of Citi's management are not aligned with those of shareholders.
The analyst continued by noting that Citi repaying the TARP adds nothing to its business model: the bank's book value will not increase, but earnings per share are sure to decline. He also mentioned the stocks of other TARP-repaid banks, pointing out that none of these stocks surged following the news.
When Erin asked the analyst if the stock looked cheap on a long-term basis, Bove admittedly answered that pretty much "anything in the banking industry" will look cheap over a 5-year -- or maybe even 2-3 year -- time frame, but that government ownership in Citi will weigh on the stock for much of 2010. Bove said he sees a lot of selling pressure in shares of Citi over the next 3-6 months.
Although Bove now claims to have a Sell rating on Citi, we have yet to confirm this, and, to be honest, are somewhat suspicious. At last check, Bove had a Buy rating and $6.50 price target on the stock. Maybe this has something to do with Bove's recent statement that he will no longer distribute his calls to the press, but shoot... wouldn't the market have heard something about such a swing in the analyst's sentiment?
Citi shares closed down 6.6% to $3.69 today.
The analyst continued by noting that Citi repaying the TARP adds nothing to its business model: the bank's book value will not increase, but earnings per share are sure to decline. He also mentioned the stocks of other TARP-repaid banks, pointing out that none of these stocks surged following the news.
When Erin asked the analyst if the stock looked cheap on a long-term basis, Bove admittedly answered that pretty much "anything in the banking industry" will look cheap over a 5-year -- or maybe even 2-3 year -- time frame, but that government ownership in Citi will weigh on the stock for much of 2010. Bove said he sees a lot of selling pressure in shares of Citi over the next 3-6 months.
Although Bove now claims to have a Sell rating on Citi, we have yet to confirm this, and, to be honest, are somewhat suspicious. At last check, Bove had a Buy rating and $6.50 price target on the stock. Maybe this has something to do with Bove's recent statement that he will no longer distribute his calls to the press, but shoot... wouldn't the market have heard something about such a swing in the analyst's sentiment?
Citi shares closed down 6.6% to $3.69 today.
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