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Michael Terry
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Michael Terry, CFA has nearly 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, Mr. Terry has analyzed and invested in both public and private companies around the world... More
  • Citi - Another Writedown Coming? 0 comments
    Feb 22, 2012 3:21 PM | about stocks: C
    Via WSJ:
    Citigroup Inc. (C) is facing a potential multibillion-dollar write-down as it begins unwinding its minority investment in the Morgan Stanley Smith Barney brokerage.
    Morgan Stanley (MS) has the right this spring to start buying Citigroup out of the joint venture, which was formed in 2009, when the sides combined Citigroup's Smith Barney with Morgan Stanley's wealth-management unit. Price is likely to be one of the main points under discussion when negotiations begin this spring, people familiar with the situation said.

    Morgan Stanley Smith Barney currently is valued at $20 billion on Citigroup's books by the reckoning of Howard Chen of Credit Suisse-$5 billion more than it is on Morgan Stanley's, the analyst figures-thanks largely to differences in how the companies accounted for the assets they contributed. The value of Citigroup's equity stake in the business is roughly $10 billion.

    Full story here: online.wsj.com/article/SB10001424052970204131004577237363070975608.html

    Just another smackdown for Citi. Mike Mayo has the right to question the banks valuation of their assets. Now, certainly MS has a different axe to grind than Citi with its valuation. But even if you meet them somewhere in the middle, it is another writedown for Citi. As an equity and preferred holder, I am getting a tad tired of this bank.

    Disclosure: I am long C.

    Additional disclosure: also long Citi P preferred.

    Themes: Banks Stocks: C
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