Let's see if the taxpayer has a BOHICA moment on a conversion at $3.40 vs. February's steadily declining $3.65 (Feb. 2) to $1.50 (Feb. 27).
From the Wall Street Journal:
Citigroup Inc. said its delayed plan to convert billions of dollars of preferred shares into common stock will occur this week, clearing the way for the government to own as much as 34% of the struggling bank.
The $58 billion conversion, announced in February when Citigroup shares were trading near $1, was supposed to happen in April but was slowed by negotiations between the bank and federal officials over details of the complicated transaction.
The deal is aimed at reducing worries about Citigroup's capital levels, and the company said last month it would expand the conversion to help plug the $5.5 billion capital hole found by the Federal Reserve in its stress tests of the nation's 19 largest banks.
The reason for the delay, which will make the government Citigroup's largest shareholder, isn't clear.
In a statement Monday, Citigroup said it "appreciates the cooperation and support it has received from the federal banking regulators in connection with the exchange offers."
Citigroup shares fell 1.2%, or four cents, to $3.42 in New York Stock Exchange composite trading at 4 p.m.
Like many other bank stocks, Citigroup has surged in the past three months as fears have eased about vulnerability to future losses on loans and other assets....MORE
From our May 20 post "Indexes Underweight Citigroup (C)":
C and the Indexers
Note to self: Citigroup market cap calculation doesn’t reflect the upcoming increase in float due to the conversion of various preferreds. This means that pure indexers are way underweight in the stock, by a factor of 4. Expect some fireworks when the convert becomes effective.
At $3.77, market cap is $20.645 billion and C’s S&P500 weight is 0.26, should move up to 1.00 approximately.
Disclosure: Long C
Which may answer the question posed at MarketBeat this afternoon:
Key Financials Stay Aloft Despite Monday’s Drop: But Why?
Key financial stocks managed to avoid getting dragged down with the rest of the equities markets early today, though stocks have since fought their way back to being roughly flat.
Bank of America (+1.2%), Wells Fargo (+2.3%) and American Express (+1.8%), were still up at last glance, though Citigroup recently began to slip. The fact that these financial stocks are staying aloft amid selling elsewhere in the market is important, says Howard Silverblatt, senior index analyst at Standard & Poor’s....MORE
C was up a penny in late afterhours trade.