When will Citigroup get it right? Wednesday, October 31, 2007
Posted by ei-forum in US Traded Stocks.4 comments
Citigroup (C) has been testing investor patience for a number of years and Mr. Prince is definitely running out of time. But how long will this last? How long will investors have to wait until the stock price reflects the true value of this company? Naturally, we always have to keep in mind that, as Keynes said: “Markets can remain irrational longer than you can remain solvent.” However, we are confident that the long-term investor will be rewarded.
Let’s look at some of the numbers for Citi:
- P/E Ratio = 10.05
- Est. Div. Yield Curr. Yr. = 5.1%
- Est Div. Yield Next Yr. = 5.5%
- Price/Intrinsic Value = 1.00
- Price/Book = 1.73
- Return on Equity = 18.4%
- Net Margin = 24.03%
- Operating Margin = 33.07%
We are not saying that everything is going fine but Citigroup is a cash machine that is currently paying a pretty good dividend. People tend to focus on the problem areas but also forget that Citi has a very diversified portfolio of activities and the management overhaul will start to bear results. A long-term buyer of this stock should be aiming to see it back in the mid 50s within the next 24 months.
Please read our disclaimer: here.
Mike Mayo on Merrill Lynch Tuesday, October 30, 2007
Posted by ei-forum in US Traded Stocks.add a comment
Anyone who followed the conference call already knows the case put forwards by Mike Mayo from Deutsche Bank and the the tough questions he had for CEO Stan O’Neal. However, for those who missed it, we would like to summarize Mayo’s take on Merrill (MER).
Mayo highlights that 7/8th of the company is performing extremely well and that the 3 main tasks ahead are:
- Getting the numbers right.
- Regaining trust and credibility.
- Corrective action.
Fairly obvious one would think but what we found interesting, is his case for Merrill’s stock being worth over 100 USD – possibly up to 120USD, in the event of a take over.
Merrill Lynch owns a 20% stake in Bloomberg and a a 49% stake in BlackRock. The estimated sum of the parts is 1/4th more than the current market cap. Basically at current prices, you would be getting the whole brokerage business for free.
The stock price has recently gone up in light of O’Neal being replaced and Mayo’s comments. We feel that, in light of recent news and confusion with the board, the stock might drop back down due to panic and confusion about leadership and this dip could present and interesting buying opportunity for the long-term investor.
CNBC video link: here.
Please read our disclaimer: here.
Dogbert and Economics! Monday, October 29, 2007
Posted by ei-forum in Investing Humor.add a comment
Lessons from Buffett Friday, October 26, 2007
Posted by ei-forum in Miscellaneous.add a comment
Just a small Friday post before the weekend.
On his trip to South Korea, Warren Buffett found time to share some more words of wisdom:
- “One of the lessons that investors seem to have to learn over and over again, and will again in the future, is that not only can you not turn a toad into a prince by kissing it but you cannot turn a toad into a prince by repackaging it… but very imaginative people in the securities market try to do that.”
You can be a stock market Genius, J. Greenblatt Thursday, October 25, 2007
Posted by ei-forum in Book Reviews.add a comment
Like ‘The Little Book that Beats the Market’ (read review), this book keeps on teaching readers how to make money in the market. Greenblatt manages to explain how to take advantage of opportunities that arise in a very simple and straight forward fashion.
He focuses on Spin-offs, Mergers, Restructuring, Recapitalizations and Bankruptcies to highlight how the Enterprising Investor, who is willing to take the time to do some research, can greatly profit from these situations and actually beat professionals without even having to compete with them.
The book tackles each situation not only by explaining why, how and when you can profit but takes readers through a number of case-studies to prove all the points that Greenblatt is making.
Recommended reading for both novice and experienced investors.
Enjoy!
Rant on Investor Expectations Tuesday, October 23, 2007
Posted by ei-forum in Rants.add a comment
Time for another rant, we just couldn’t resist! We were watching a financial network show and they have a lunch time program where investors can call and ask questions to the ‘experts’ they have on the show.
As usual with these kind of shows, the kind of questions vary but this particular investor called to ask the following:
- “Please recommend a low risk share with a 50% short term potential.”
Naturally, the ‘experts’ said that if they knew of shares like that, they wouldn’t have to work for a living! The issue we would like to ‘rant’ about is the fact that most investors do not take the time to understand what investing is all about and they simply see the stock market as some kind of game or easy way to make some fast-money.
As a general reminder: ‘easy money doesn’t exist’, at least not consistently and legally…. take the time to understand and learn what investing is about and what an interesting, challenging and potentially rewarding endeavor it is. If you just want fun and excitement, you can always head to Vegas!
Dogbert and Venture Capital! Monday, October 22, 2007
Posted by ei-forum in Investing Humor.add a comment
Warren Buffett MBA Talk – Part 10 Friday, October 19, 2007
Posted by ei-forum in Buffett MBA Talk.add a comment
We’ve come to the final part of Buffett’s talk where he tackles market movements and life in general.
The first part focuses on the fact that ‘on average’ most people will be ‘net buyers’ of stocks and not ‘net sellers’ and therefore, we should be looking for depressed markets in order to be able to pick up bargains.
The second part focuses on how lucky Buffett has been in his life and how much he enjoys what he is doing. The speech ends with an extremely insightful take on society, the social system and social responsibility.
Enjoy the last part of the talk:
Warren Buffett MBA Talk – Part 9 Thursday, October 18, 2007
Posted by ei-forum in Buffett MBA Talk.add a comment
Large Caps or Small Caps? Here Buffett continues to stress that the important thing is understanding the business and acquiring a certainty about the future potential. Market Cap only has an influence if you have such a large sum of money to invest that you simply can’t invest in smaller publicly traded companies.
The questions Buffett asks himself are:
- Can I understand the business?
- Do I like/trust the people that are running it?
- Is it selling at an attractive price?
Then the discussion turns to real estate investments and the fact that, if you can, it is always better to invest directly rather than through an intermediary like an Investment Trust.
Continue to enjoy the talk:
Tomorrow we will take a look at the last part of this MBA Talk.
From 0 to 10,000 in 4 months! Wednesday, October 17, 2007
Posted by ei-forum in Miscellaneous.add a comment
We would like to thank all of our readers for their continued support and look forwards to doing our best to keep posting!
All the best,
Enterprising Investor Forum
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