Citigroup Inc. (C): Finding Value in Unloved Stocks


The markets have had their own challenges resulting in pullbacks, but still, there is no signs of fear from investors according to UBS, Thomas Digenan, in an interview on CNBC. Big financial companies like Citigroup Inc. (NYSE:C) continue to face immense pressure in the market at the back of not being loved by the market or the federal government according to Mr. Digenan.

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Complacency continues to be the biggest challenge seen by the performance of Citigroup and the likes of Morgan Stanley (NYSE:MS) and JPMorgan Chase & Co. (NYSE:JPM) in the recent quarters. Mr. Digenan believes the market is trading at fair value.

“I don’t think the market is very rich, I think it is trading at fair value. It has had quite a rally, but you have to remember where it has come from.” said Mr. Digenan

Mr. Digenan also highlighted that it is important to carry out stock selection, if better returns from investments are to be achieved  because there are opportunities hidden by complacency in the market. When looking for value investments, Mr. Digenan said that the financial sector is one of the best places to make a pick considering most of the stocks there are undervalued. Complacency continues to be one of the biggest challenges as it makes it extremely difficult to make a differentiation for a better choice of stocks to invest in.

Digenan also pointed out how Citigroup Inc. (NYSE:C) is trading below its tangible book levels considering its problems on the stress test. It is still questionable when Citigroup Inc. (NYSE:C) will be able to pay back money to its shareholders.

“I think it is a company where the situation is when are they going to be able to pay the money to the shareholders, not if they can,” said Mr. Digenan.

Investors have been advised to hold a “Normal” weighting on U.S equities as the market continues to trade on fair levels. The financials led by the likes of Citigroup Inc. (NYSE:C) have disappointed so far, because of the environment they are operating in, continues to be under scrutiny from regulators.

Disclosure: none