Citigroup, Inc. (C) and General Motors Corporation (GM) are not investment, they are trades.
By Daniel at 9 July, 2009, 2:52 pm
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GM had to take out an ad telling people in no uncertain terms that its stock is WORTHLESS, it’s in BANKRUPTCY.
Hello?
So understand that you’re dealing with American Idol fans here.
I was asked yesterday if C is worth $2.60 in salvage value.
Well, Citi is insolvent.
Ordinarily in an FDIC take over of an insolvent failed bank the FDIC has to come up with money to pay depositors so you figure it out.
If C were to reverse split it would get shorted back down like AIG.
These stocks are not traded on valuation but according to popularity with the American Idol fans at penny stock prices.
Reverse split the stock price up and the reality hits the fan.
tarn
Story: US Stocks Mixed, With Alcoa, Whole Foods Marking Advances (13 hours ago)
In reply to:mmc
Goldy Man Sack’s Blankfire actually commented at the top of the green shoots bulls orgy that the recession would be long and protracted.
Goldy Man people made the call that C would be back trading at a buck and change.
From what I understand the Stress Test pegged C’s loss at $90 billion.
Consequently C converted more preferred to common to make up for the common equity shortfall.
There’ll be a “gazillion” shares of this thing.
(That, by the way is a highly technical term which roughly translates as “beaucoup.”)
Once the conversion takes place the people who bought the preferred would dump the common and take profit.
But C will probably stay north of $1 like AIG did for the longest time or GM even after filing.
The mistake would be to do a reverse split as proposed.
Then it’ll be shorted back down.
Assets ain’t worth what they were in the bubble.
And the liabilities are through the roof and mounting.
To answer your question directly, it’s hard to tell what the salvage value is if any.
It’s like the recession in progress.
I think we haven’t seen the worst, we’ve merely begun the adjustment.
C is not an investment, it’s a trade.
It’s being shorted down to a buck and change.
tarn
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