Monday, April 26, 2010

Citigroup Tax Payers Cheated Again

Citigroup (C) Uncle Sam is starting to exit its position. Morgan Stanley was hired to auction off some shares. The stock still floats below the psychological $5 @ share point. The Fed will probably realize well over $30 Billion upon full disposition. That’s a few brand new aircraft carriers.

The trade is a political one and does not bear any relationship to any investment logic that may exist out there. If the Fed were a true long term investor and really wanted to maximize its wealth then hang on. When they finish fixing Citi it will be worth more than $5 @ share.

Risk assets were transferred from private hands at a key inflection point that could not look any worse. Now that Citi is showing true signs of recovery the tax payer gets shafted. Again. As the tax payer is not being compensated for the risk it took. In the meantime senators debate financial reform but do not realize they have been taken for another ride.

Disclosure: No position in this stock