I think Pandit has a plan....to punish shorts.
Neither will happen as long as the Gov owns shares or warrants. It will happen after C regains permission from the Gov and bank regulators for doing buyback.
I feel it will be a RS of 1:10 and immediately afterr that C will be buying shares like crazy...to prevent the price from dropping and to punish the shorts that would have just pulled the trigger.
C has better things to do with that $200 billion in cash than to buyback 20 billion shares.
The RS/BB combo would do the same thing at much less cost to the company.
And shorts would have been crushed.
C will be around $8 to $10 before they regain permission for any buybacks.
There you go....I'm just being realistic....this is what I would do if I were the CEO.
"I think Pandit has a plan....to punish shorts."
You call the brain activity of wet dream "think"?
"I feel it will be a RS of 1:10 and immediately afterr that C will be buying shares like crazy...to prevent the price from dropping and to punish the shorts that would have just pulled the trigger."
There you went, so much "feel".
Chall --- what makes you think that the City needs a permission "from the Gov. and bank regulators for doing buyback"? In no case, the corporations normally needs any such permissions.
Are you sure that the Citi's articles of incorporation do not cover the redemption of its own shares? If they do, then this articles, and not the Corp. Code, control it. But in any case, such control is limited to preannouncements and time limitations. Such compliance with the Corp. Code is all what is required from the corporation.
The City did some buybacks in the past. Was it obtaining any Gov. permission that time?
It was one of the conditions for accepting TARP money...I posted this before...long ago.
And there was a FT article that said bank regulators have told all banks not to buyback shares until the crisis is over.
Published: October 20, 1999
Citigroup said yesterday that it would increase its existing stock repurchase program by $3 billion. The repurchases, which represent about 2 percent of the company's shares outstanding, will be made from time to time in the open market, primarily to aid employee benefit plans, the New York-based financial services holding company said. Shares of Citigroup closed at $44.9375, up $1.25, on the New York Stock Exchange yesterday.
This was a simpe company announcement, and it does not look that it was in compliance with its articles of incorporation; but positively it was not pursuant to Corp. Code.
It looks that the Citi's articles does not require any preannouncements of its shares redemption.
By the way, I adressed here first, and quite long ago, the possibility and advantages of simultaneous announcement of rs and buyback, and I tried then to return to this matter many times, but all to no awail. The board kept ignoring this.
Share Buyback (redemption) ---- law 15-Apr-10 01:30 am
The repurchase of its own shares by a corporation is subject to articles of corporation… typically giving a broad discretion to the board … and not requiring any preannouncements and time limitations.
Where the procedure is not covered by the articles, it is controlled by state corporation codes (in California, Corp. C. 509).
Ghall, I don't know what happened erlier to cause the "leave the board" discussion but I apprecaite your views also and hope that does not happen, until i sell at least. A couple of thoughts on your take here: What better do they have to do with $200b? They are not about to buy up any companies, it would send the wrong message when the are trying to downsize. I don't think they will buy back 20b shares buy more like 5-10b share. Buying now they get the "good guy" pricing. Buying @ $8-$9 they get they same number of share for twice the price? The have less toxic exposure to toxic assets then any of the big banks - they have the best cash ratios of any of the big banks. There is no better time then right now.
Completely agree. It should be considered also that the buyback is in Citi nature, that the Citi had done it before repeatedly under much, much less favorable situation. And here, it has all this excess cash that is only growing in amount. Right, how this cash could be used more efficiently if not for the buyback. And if 20B sh buyback is too much, then perhaps it should be in combination with rs. But I hope the City would go for rs only if it could be sustained.
I agree with you, this is more likely will happen.. I do not think the intention will be to punish short, I think it will be in best interest of citi and share holders.
But I wish they do this at this level then doing when it will be in 8-9
reduce expense for buyback
once this isbehind more investors will line up
the only reason I can think , they are not doing it right now is bcaz as you rightly said regulator may not allow..
And here one reason I think why they may not do buyback at all..
Citi will never let itself again at mercy of shorts , so if even there is a small chance of economy dbl dip, they will be very careful, and I hope they rather
from lateste events and news, I feel citi is now in control and there is good chance that they may announce (or atleast present) their intention
to reduce outstanding float oneway or other .. That is last hurdle for citi to be on full path to recovery
And the PPS of $8-$10 should habbepn sometime this year. That would make it a 250 - 300 billion dollar company. Hard to imagine but I think once C starts showing profits, that is not too hard to achieve.
The key is sustained profitability. I do hope April 19th would be a good beginning for the consistent upward move without any tankings.
But I am out when this is 8.