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Citigroup Inc. Message Board

  • arsaxe arsaxe Apr 16, 2011 11:56 AM Flag

    SEC, HFT and Citi investors

    http://www.thestreet.com/story/11084332/1/citigroups-reverse-split-is-bad-for-investors.html

    The article explains to the certain degree what the risk is for Citi stock investors after reverse split is done. For already years many market participants argue that HFT trading with all the liquidity benefits it provides as it's proponents argue has changed significantly the market landscape. Partially due to existent large HFT institutions business valuations have lost its meaning and price evolution has become the variable on which such institutions bet on. Capital markets remind less of efficient capital formation and rotation. They look more like arenas where all kinds of trading tecniques prosper but investment. The pursuit for rebates against liquidity providing has become of such massive significance for exchanges and financial institutions that it is hard to argue against all these claims on illegal activities and manipualtions streamed by many investors. The market system is no longer for the service of businesses and investors as the core idea of investment which is price-value convergence has been literally destroyed.

    In case of Citi there is no doubt that stock could outperform or underperform depending on macro and specific developments. It also could be vulnerable to sector rotations and general negative attitude of investment public to banking sector. There could be other myriad reasons. However, only investors could decide the fortune and performance of a business expressed in stock performance. If market technology leads to what some finance professionals name "innovation" which in turn to affect the fundamental principals and criteria on which market should operate and treat everybody, utilization of such technology runs into a question or at least should be reconsidered or readjusted. Technology is a great thing to have but it has to help people better understand and improve their potential to thrive. Unfortunately, in our days the technology institutions use in the market place benefit very small professional groups and I doubt it delivers benefits to majority of investors.

    I would strongly recommend to people who plan to hold Citi stock and who make investment dicisions in thoughtful and analitically solid gorunds to keep tight communication with SEC regarding expected reverse split. As many professionals argue R/S itself has no meaning on valuation basis. For reasons other than that and partially explained in the article certain brokers and traders expect the stock to underperform based on lost advantages to HFT institutions after R/S. I'll be tracking the stock after R/S. If price falls on improving fundamentals, US and global economies and certain HFT patterns identified in bid/ask spread evolution I am getting ready along with my lawyer, email exchange and phone conversations with SEC authorized people and exchange officials to demand active monitoring of larger HFT trading institutions engaged in Citi after R/S. If necessary we will ask for public disclosure of trading records of HFT firms engaged in C stock trading after R/S. The further course of action to be determined later. Such plan is not cheap. It is time consuming. It may fail but enough is enough. Someone should start it eralier than later.

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    • Don't waste you time or money on a lawyer. The HFT will be gone after R/S. However, the Shorts will be running rampant. Maybe you and your lawyer can go to the SEC and tell them how unfair the game is, huh? GL

    • Can't WAIT for the reverse split. I will be able to SHORT this POS with FULL MARGIN. I wish they would HURRY UP and get it done.

      Banksters are on the chopping block as they have earned the reputation of being ruthless and greedy. Citibank will be the next Lehman Brothers and da gubbamint has cast off it's lifeline. All hope is lost for this POS.

    • You have made an excellent review of the situation. Briefly, my response is that the reverse split will expell HFT and bring in more disciplined investors, the profit and book value per share then will look great and comparable to those like JPM. Above all, dividend will get better as time passes, the share price will stabilize and grow steadily thereafter and, of course, the casino-type gambling and price-movement of the shares will be gone (along with the Hong Kong chinese gamblers and the like). What more you want if you want to invest in it?

      Sure, the betters will drag it down before the reverse split or just a day or two before. But, it will gradually come up, stabilize, and then grow steadily!! I surely will add many more to my portfolio when the Wall Street dogs beat it down on May 4 and 5. I do not think that it will be down after the split because the institutions will then start jumping in. Since Pandit made that announcement early enough, I think, many institutional boards have already made up their mind to get in just after the split; i.e., the decision-waiting for them won't be there and the share price most likley begin its gradual climb soon after May 6. Of course, that is more likley if the results and the guidance are healthy which, I am sure, both will be (because that's the wjhole plan!). I think Pandit has made a very smart move.

 
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