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Bove: Thanks to Hank Paulson, Citi Shares Set to Double From Here

Posted Mar 19, 2010 12:22pm EDT by Peter Gorenstein in Investing, Banking
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The U.S. government may unload its 27% stake in Citigroup as early as next month. The Wall Street Journal reports that the Treasury Department may dump its 7.7 billion shares in the bank after the company releases its first-quarter earnings on April 19.

Once they do, Rochdale Securities bank analyst Dick Bove, recommends investors scoop up the shares. "This company isn't what it was 2-3 years ago when it got in trouble," he says.

Citi's assets were essentially divided into a "good bank," Citicorp, and a "bad bank," Citi Holdings, after the financial sector meltdown. Now that the company has shed its non-core businesses, Bove is convinced the Citicorp unit is poised to earn 70 cents a share and that Citigroup could trade at about $8.50 in the next few years.

Citi CEO Vikram Pandit told staffers last week he believes the company can deliver $20 billion in profits in the near future.

Overall, Bove believes the Citi investment and the TARP program have been a win-win for taxpayers.  "This has been one of the most widely successful programs the government has even been involved in," he tells Henry in the accompanying clip.

The way he sees it, TARP stopped the financial crisis and at the same time earned a handsome profit for the government. "I think Hank Paulson deserves accolades beyond accolades for what he's done" he states.

(Editor's Note: Bove has no relevant disclosures for Citigroup stock. He currently rates the stock a "neutral.")

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