I have previously written about buying certain types of secondary offerings. I added C last night at $3.25 and finished up my buying this morning at $3.15. The C offering tells me two things. First, the government is not going to shutdown the bank anytime soon. C would not have been permitted to issue securities if its future as a going concern was in immediate jeopardy. This means $0 for the stock is not a reality in the coming months. Second, I have read that the government’s cost basis is $3.25 and that the government plans to sell over the next 12 months.
We all read about accusations of government manipulation in the stock market. Why not benefit from it? The Obama administration is excellent with the media. It therefore seems unlikely that I’ll be reading an article in the coming months that the government lost money on Citigroup. It seems much more likely that the share price will be higher and that I’ll be reading about the government’s profit and successful investment in Citigroup.
As I mentioned previously, I’m buying C as part of a secondary offering portfolio. All of these positions are less than 1% in size and I plan to hold the portfolio for a while. This morning I also added LYG at $3.50.
If the market gets weaker today, other potential ideas are BAC ($15) and CNO ($4.75).
