C
📉 Citigroup is highlighted for trading at a significant discount, with a Price-to-Book (P/B) value of approximately 0.55x, suggesting potential undervaluation.
🏦 For financial institutions like banks and insurers, tangible book value is presented as a more reliable valuation metric than standard book value, as assets are closer to their stated cash value.
🔑 The investment thesis hinges on identifying management actions (catalysts) like aggressive share buybacks or strategic divestitures that could help close the gap between market price and book value.
@bernardodegarcia:
“There are times when we find very interesting things, and I don’t mean this is the best stock, but look at the case of Citi. Look at the Price-to-Book value; it’s not the tangible book value, but let’s use it as a proxy because we don’t have the information here, and we’re not going into the balance sheets because we have to go to bed soon. It’s trading at 0.55. This means that if the company were sold entirely now, you would probably get close to $120 [per $100 of book value, implying a ~1.2x return if sold at book]. In the case of JP Morgan, for example, it’s quite the opposite. Finding these types of businesses, finding that they are trading below their tangible book value, not just book value, seeing that the management team has a high position in the shares – in Citi’s case, it’s not like that – seeing that the management team, imagine, earns a million dollars but has 40, 50, or 100 million dollars invested in the company, you know they have skin in the game. And then the most interesting thing: ‘Okay Bernardo, you’re telling me Citi is trading at practically half of what it should be. What is Citi doing to close that discount?’ Is it repurchasing shares aggressively? Is it closing the business on one side, selling it on another? What exactly is it doing? It becomes a special situation.”
Watch the exact part of the video where @bernardodegarcia talks about Citigroup here:
Watch the video on YouTube
Read more articles analyzing Citigroup (C) at the provided link. C stock.
