Wither Citigroup Now? Pandit's Pronouncement

It's just after noon on Tuesday, January 15th, 2008. Citigroup CEO Vikram Pandit has concluded his first earnings announcement a little while ago, and the markets are not pleased.

The write-offs are huge. Losses are near $10B. The dividend has finally been cut nearly in half. Apparently, it wasn't enough.

Seen on the left, my first Yahoo-sourced chart indicates that the company's stock price has gapped significantly lower today, back down to or below 27, from its recent 5-day high of 29.

According to some of the pundits talking on CNBC this afternoon, including one fairly prominent fund manager, Vince Farrell, Pandit blew his chance to make a good first impression. There was no talk of significant, immediate job cuts.

Let's take a longer look at Citi's stock. Here's a chart of the S&P and Citi's stock price for the last three months. The latter has been pretty much in free-fall for that entire time. It had a few local minima, where the price moved up by 5 or 10 percentage points over a few weeks. But the trend has been steadily downward.

Over the past year, the picture is similar. The price of Citi's stock has declined over 40%. Even before the summer credit market debacle, Citigroup's stock had been fading, relative to the S&P.

Finally, we have a Yahoo-sourced chart of the S&P and Citigroup for the past five years.

In this view, we see that for largely the entire period, except for a brief few months in mid-2003, the bank's stock has performed, at best, like a market-tracking stock, and, since January of 2005, three years ago, significantly worse.

Taking a look at all of these views- multi-day, multi-month, 1 & 5 years- it's hard to argue that Citigroup has been a desirable investment, or well-managed, for the past half-decade.

So, does Pandit's poor opening performance as CEO today matter?

As I jokingly wrote in this spoofish post last month, Pandit's already won. He's made at least tens of millions by selling his mediocre hedge fund to Citi last summer.

So, in all honesty, I think the answer is, "no," it doesn't matter. Nothing has changed at Citigroup.

And, according to some pundits speaking about the situation today on CNBC, it could be years before the nation's largest bank regains any semblance of traction in terms of operating performance and total return performance.

What really shocks me, though, is Punk Ziegel bank analyst Dick Bove's continuing 'buy' position on Citigroup for the past two years. At least I think his eternal optimism on the bank extends that far back. I know he was touting it heavily last spring, claiming that its best days were just around the corner.

Even this morning, he was shilling for the crippled bank on CNBC, issuing yet more strongly-worded statements of hope and support for Pandit's financial Pig.

You have to wonder what in the world would possess a veteran analyst like Bove to hew to a single view of such a mediocre, troubled bank for so long.

To me, reviewing the performance of Citigroup's stock over such a long timeframe, and comparing that to its erratic and troubled operational performance during the same period, I would have to agree with those who advise steering clear of this financial utility for the forseeable future. Aside from continuing to enrich Vik Pandit, and impoverish the poor shareholders whose original positions are being so rapidly diluted by new capital-raising efforts, I can't imagine anyone who would even consider owning this company's shares.