Sandler O’Neill analyst Jeff Harte was out with a note on Citigroup Thursday afternoon, offering his two cents on reports that the U.S. Treasury is exploring plans to sell its 27% stake in Citigroup Inc. in a program of regularly scheduled sales. “Divestiture through a blind trust or other ‘discretionary’ account managed by a fiduciary makes sense to us and would be an incremental positive for C shares,” wrote Harte.
But more importantly, Harte contends that concrete signals of a U.S. departure from Citigroup could coax institutions back into the stock. And that could be a big driver of price gains:
We have stressed repeatedly that there is a large pool of potential incremental institutional buyers for what appears to be largely under-owned C shares. Institutional investor ownership of C has been on the rise, but remains well below historical and current peer group levels. Institutional investors and mutual funds currently own 39.6% and 12.8% of C shares versus 74.3% and 35.2% of peer group shares, respectively....MORE