Citigroup Inc. (C)

Long been in the doghouse, but the new CEO has pared foreign exposure and made the company more efficient. Remain cheap at a 36% discount to tangible book value. They will rapidly boost earnings. 

Owns both, for different reasons.

JPM is the best bank in the US, perhaps the world. Jamie Dimon is the smartest banker around, and has his own money invested in the bank. Management has a deep bench. Not cheap, but he's not selling. Might grow 12-15% a year.

Citi is a turnaround, trades below book value. Most of the others trade at a premium. Owns a number of great, capital-light businesses. Doing a good job getting out of the morass of last 15 years. Doesn't usually buy turnarounds, but at 1/3 book value it was too cheap to pass up. Looking for a double in the next 3 years.

Still low-hanging fruit, despite big run. At 9x, cheaper than most Canadian banks. Beat last quarter, EPS up 10% YOY. Beat on revenue. Making progress on reorganizing and optimizing costs. Will be beneficiary of lower rates and steepening yield curve. Should benefit from this great rotation where people are looking to own things other than tech. $1B in buybacks in this current quarter is a very nice tailwind. 25% growth rate. Yield is 3.5%.

What's not to like at these levels?

The banks are down today after reporting, but he doesn't see anything wrong with the sector. The economy has slowed, but the banks should do fine when the Fed cuts rates. Part of today's selling has been profit-taking, because the sector has performed this year. Projected expenses for Citi are only a touch higher than expected. More importantly, share buybacks this quarter will be $1 billion, alight number due to ongoing problems with the regulators. They beat earnings and revenues though. The stock is cheap.

He doesn't understand why Citi is down. The CEO's plan is coming together. He's not concerned about their slightly higher expenses. They just reported a beat. 

He just added more. Until 9 months ago, CIti was a dog as the street wasn't giving the new CEO the benefit of the doubt in her turnaround plan. But that's changed. Will know more in next week's earnings. Last week's bank stress tests were important. Citi will slightly raise its already-high dividend, but will buy back a lot of shares.

They passed the recent stress test and having been buying back shares. He expects even more of the latter.

US banks surprisingly underperforming a bit in the last month or so. Chart sideways since May, say around $56 to $64. Bank earnings will be in about a month, so perhaps investors are waiting to see the direction for the sector.

On Tuesday, they will hold an analyst day devoted to their services business, the most consistent yet least promoted part of the bank. He thinks this meeting will move the stock.

BAC has shown recent strength with a rally, with their Merrill Lynch franchise helping earnings and is better than Citi. Citi is a turnaround story as they reduce staff and streamline. Citi have risen recently though.

Dead weight for a long time. Sweeping progress last year should continue and drive stock higher. Cheap, trades at 8x 2025 earnings, growing at 24%. More positive on US than Canadian banks. Pays decent dividend of 3.69%.

He is bullish the big banks, including this. He is bearish the regional ones.

Was upgraded today. That's a long-time coming. The new CEO is cutting costs and raising profits. So, shares should keep climbing, It's trading at 65% tangible book value.

They've struggled the most among the big U.S. banks. The CEO is carving out their weaker businesses. If he can execute this well, there is upside. Overall, a solid holding.

Citi trades at only 0.6x book value, cheapest among peers, but there may be something wrong with that. Trades at a low 10x PE. Last September, they announced a major restructuring, like cutting jobs and executive layers, and they already dropped many of their international businesses. Wall Street is excited by the many job cuts, but he thinks the growth is questionable. It's the only major bank expected to grow earnings in 2024 at 5.2%. He hopes they make a comeback, but will believe it when he sees it.