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“Citigroup” – What’s in a Name?

Investors appear to be punishing stocks that played inauspicious roles in the credit crisis of 2008. One stock in particular, Citigroup, stands out as a world class bank with a global presence and a strong brand. In my view, Citigroup is positioned well in the financial world – it is an American institution, far enough removed from the European sovereign debt crisis to not be a focus of the risks, but global enough in its reach to take market share from European competitors who are busy playing defense.

Are investors flocking to this potential opportunity? It appears they are not, based on valuations of Citigroup compared to some of its peer American banks. Citigroup’s valuation, at a Price-to-Earnings ratio of just 6.5 is far below its competitors. Though Citigroup’s brand may be strong and a resource for attracting business from a global clientele, it may also be tarnished by its image as one of the “Too Big Too Fail” institutions that needed a bailout in 2008.

Citigroup’s name is both an asset to the company and a potential deterrent to investors. It is only the name that should deter, though. Citi has come a long way since 2008 in improving its footing – it is again a profitable institution and has taken great strides to reduce its leverage. It is, in my view, simply not the same company that faced trouble during the financial crisis, but a rejuvenated bank with potential to compete and take advantage of global opportunities. Investors should look past the name and the baggage it may carry and weigh the company on its merits and its valuation.

 

Important Disclosure Information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable. Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This discussion is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Please note that this is not a recommendation to purchase any stock discussed in this article.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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