Citi Shares Lead Banking Sector Gains
After falling steadily for months, down 15.26% this year and reaching their lowest share price since last August earlier this month, Citigroup (NYSE:C) shares have jumped up 1.98% today and are 4.65% for the week so far, leading the way as financial stocks see slight increases this week. So why are Citi shares up this week after having the worst year of all its top competitors, including J.P. Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), and Bank of America (NYSE:BAC)?
For one thing, Citi has put EMI music group up for sale after seizing it from private equity firm Terra Firma in February. After the sale of rival Warner Music Group brought in $3 billion, Citi has high hopes of getting back a decent chunk of the $5.2 billion it lent Terra Firma for the label, more than they expected back in February. There is already the expectation of a bid from Universal Music Group.
It also doesn’t hurt share prices that Citi won the OpenWealth Award for Excellence in Business Process Management, “for integrating trust accounting and custody into household wealth management and reporting capabilities,” according to a Citi press release. And on Monday they announced their number one ranking among private equity fund administration services by Comissão de Valores Mobiliários, Brazil’s securities regulator.
Tuesday, Standpoint Research analyst Ronnie Moas gave Citi shares a “Buy” rating. According to Moas, “Citi is still in the process of reducing risk, and still faces some challenges, but those challenges, issues and concerns are already priced into the shares. Fundamentals, including loan volumes and credit quality have been improving, but this has been overlooked by the market… overshadowed by negative news headlines related to housing and regulations.”
Finally, in partnership with Google (NASDAQ:GOOG), Citi has invested $204 million in the United States’ largest wind farm, the 1,550- megawatt Alta Wind Energy Center in California, which is being developed by Terra-Gen Power LLC, an affiliate of ArcLight Capital Partners LLC and Global Infrastructure Partners. According to Bloomberg analyst Amy Grace, the farm will make for a long-term revenue stream that’s “better than Treasuries”. Grace says wind farms are stable investments that often see high returns.
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