Cramer Recommends Buying Citigroup (C) On Equity Raise; Is He Playing With Fire?

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C Hot Sheet

Overall Analyst Rating:
BUY ( Down

Down)

Dividend Yield: 0.1%
Revenue Growth %: -1.5%

Market pundit Jim Cramer is recommending buying Citigroup (NYSE: C) on the equity deal.

Here is what he said at RealMoney:

"While I can't claim that this one is going to be as good at the big Ford (F) deal, I do believe that with only Wells Fargo (WFC) as a holdout, you would be buying into the second-to-last large offering in the group, and that alone is very meaningful.

I think that Citigroup has the ability to earn a ton of money once the global economy moves into higher gear -- only 50% of its business is in America -- and the company has performed surprisingly well during this period of downsizing and endless heckling. There have been real staff reductions, real bonus reductions, real real estate deductions and a wiser culture put in.

This company's book value will be a dollar or more above where the deal comes, which is encouraging. The company's book of business of bad loans has peaked; I think that the Citi Holdings part of the equation is more seasoned and less "bad" than it was.

You buy it and you sit and wait for three years -- at the end of 2012 you should have $12."

Cramer made a good call on Citigroup in the past, telling viewers on August 6th to buy the stock at $3.80, and since that time the stock ran above $5 before falling back down to the level he was recommending it at.

I think Cramer is playing with fire here. Let's see the deal and work the numbers first before making call. But I guess that's not Cramer's style. Remember CIT Cramer?

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