Richard Fogler Citigroup Inc. C-N HOLD Sep 11, 2024

They reported a strong quarter this week, beating top and bottom lines. Sales and trading saw the biggest growth while costs are under control. They gave the most forward looking guidance of the banks this week. Revenue forecast for 2025 was up and they announced a huge $20 billion share buyback.

Looks really good at these levels.

Yield curve's in better shape than it's been for a long time. The space will see lots more M&A. Attractive valuation, looking at 23% growth over the next few years and trading at 8x PE.

He's trying to play a quiet offence when he's a bit scared of the markets and tariffs. Cheap, tethered, and insulated. Financials really get a bid from Trump -- tax cuts, less regulation, lots more M&A. Yield curve looking a lot better, upward sloping. Beat Q4, earnings up 40%. Investment banking and market revenue also up. Company's expecting ROE to improve to 10-11% in 2026. Trades under 9x. Very favourable risk/reward. Yield is 2.7%, decent.

Reducing global presence by exiting unprofitable businesses is really helping earnings by lowering costs.

You'll be OK if you have your heart set on this one. He always prefers JPM.

Owns several US banks. The yield curve is steepening and the regulatory backdrop is now more favourable to the banks. The post-2008 safeguards have built huge capital in these banks and is starting to be released. Citi trades at a 24% discount to tangible book value which will compress and catch up to peers.

Are buying back 15% of their shares and trading at 80% of tangible book value, which is immediately accretive. Add to this lower compliance costs as regulation goes down. Is bullish the sector.

Has come back to support ~$56 (a critical level) with convergence on a couple of timeframes, both monthly and weekly. Short-term indicators show it trying to turn up. Buy half today; wait to see if it drops to the next support ~$50.

Financial sector offers great promise, though it's reacted to current markets by pricing in a potential recession. Slower economic growth would not be good for banks. Absent a recession, with consumer confidence returning and unleashing M&A, the sector provides a good opportunity.

A less expensive choice further down the food chain from the likes of JPM.

Likes the valuation of 8x PE, and growing ~24%. Tailwinds from Trump administration with bank de-regulation. Benefiting from years of cleanup and cost cuts. Earnings up 21% in last quarter. Fixed income was up 8%, equities were up 23%. 

Yes, the tape can toss you around if we go into a bear market. And yes, this name would sell off along with all the other banks. But at this price, with this level of growth, it's a really good bet on risk/reward. Yield is 3%.