Dilution will be small. They've got the capital from the Australian IPO and other sources. They may need to raise a few hundred million if at all, but market cap is $8B so that's not much dilution. Not a good idea to panic today.
There will be some earning impact. Higher capital requirements mean lower ROE. And the prospects for capital return are now pretty much nil over the next 2 years. That said, the stock is still cheap by most measures. I had thought these higher capital requirements were pretty much expected for USMI, so the sell off in MI stocks is a little strange to me. Certainly GNW is less affected than MTG or RDN.
Wow. Just wow. Look at JPM earnings over the last 10 yrs. Compare them with C. Then look at ROE and ANY OTHER METRIC and you will find JPM to be 1000x the bank that C is. I guess you don't let reality get in the way of your thoughts, huh?
"So why is it that JPM is doing so much better than C? "
You're joking, right? JPM was doing better than C long before Obama ever took office. You apparently do not read the papers. C is the worst managed big bank there is.
wallellaw • May 13, 2014 3:30 PM
"All the call options bookings are done, now you will see the price drop like a rock, usual game played by the
big Hedge funds. IMO, a very good time to get out at these attractive prices. Watch out below 50 soon and after this week's options expiration we will drop to mid 40s. This is nothing to do with AIG, it's all manipulation by the big funds don't get trapped with this small rally after earnings report. Watch and learn."
AIG proceeded to climb another $2 after that. Good call, wallelaw. You're a real winner. Now tell us when it's supposed to go under 50. We're watching and learning.
CNBC is absolutely shameless. Just leading average retail investors to the slaughter -- that's what they do all day.
It's a good time to stay away from this garbage. 6 bills for a niche camera company? Puh-lease. Take your money and don't look back.
Financials!?!?!? You mean that has something to do with stock price? You crazy. The stock price is a just a measure of how cool the CEO is. Nothing more.
Oh yeah, all of that and they give away stock to employees like crazy without even reporting it as part of pro forma earnings. The share count is almost 39M. What garbage. When I owned this stock a few years ago, they had around 32M shares. There's been no secondary since then, just straight up robbing shareholders. Bill Smith is a fraud.
is this stock even 92 cents? This company had $45M+ in cash at the end of 2011 and at the end of this quarter they will have less than $10M. The stock rallied based on promises from management that they have big contracts (including Intel) that would bring them to profitability by the end of 2013. That didn't happen and even the Intel revenue turned out to be non-recurring. Not really a surprise -- that's Bill smith's MO. Make big promises to analysts (and leak hints to them) and then not deliver at all. He has lied over and over and over again about SMSI's prospects and delivered lower and lower sales over the last few years and finally their cash position has gotten to the red alert phase. This stock only ever goes up on rumor (usually started by BS himself) and then crashes after results are reported. It's been going on for years. They will need to raise capital in a couple of quarters or they will need to open a credit facility as the cash gets dangerously low. Yet they have a $35M market cap. Go figure.
Sentiment: Strong Sell
Read page 15 of the latest 10Q and read the full note at the bottom. You have to understand the way numbers are presented according to SEC rules on a 10Q. The company reports ONLY average weighted common shares if there is a loss to report because the fully diluted potential common shares number would be ANTI-DILUTIVE to the per share loss -- in other words, it would make the loss look lower which is a no-no for the SEC. (This is to prevent fraud because if I knew I would make a loss, I could just issue some options or warrants and the per share loss would be lower as a result.) But that does not change the fact that those dilutive shares exist. If you want to compare apples to apples from 1Q2013 to 1Q2014 however, you need to look at TOTAL (ie, not weighted average) FULLY DILUTED POTENTIAL common shares.
TOTAL COMMON SHARES AT END OF PERIOD + OPTIONS + WARRANTS + CONVERTIBLE PREFERRED SHARES = FULLY DILUTED POTENTIAL COMMON SHARES
That is why they provide a financial supplement available on the web site, where the numbers are easier to understand. My numbers are 100% correct.
If the fine is $10B then the stock will go up. The stock has already been punished for it. Citi earns $3B per quarter, and much of that settlement has already been written as a liability. The only things that will cause a "major league drop" are a recession, a major market correction, or something we don't already know about. But those are risks for any stock and the downside in Citi is minimal considering it's trading at a huge discount to tangible book. I expect $60 in Citi by year end, and even higher before next March when the 2015 stress tests results come out and Citi is shown to have by far the highest capital ratios of any big bank. Citi will then be allowed to buy back lots of shares and reinstate the dividend. This is a good opportunity to benefit from a stock being very out of favor.
For a 10yr investment? I'd go with C. BAC is better managed and further along in cost cutting but it is too tethered to the US economy. C is exposed to more international growth and the stock is extremely undervalued because of management's sheer incompetence. If interest rates ever rise, both these banks will make a killing. I own both.
If you don't understand refinancing or rolling over debt you should not be in the market.