From Barron's Hot Research (five days old, sorry):
Sandler O'Neill says buying has offset Treasury sales of Citi stock.
By Sandler O'Neill & Partners ($3.91, Oct. 1, 2010)
THURSDAY EVENING, the U.S. Treasury (UST) announced that it had completed the sale of 4.1 billion shares of Citigroup in 2010.
The UST's Citigroup (ticker: C) ownership has declined from 7.7 billion shares (approximately 27% ownership stake) to 3.6 billion shares (approximately 12% ownership stake).
Citigroup shares have meaningfully outperformed during this time period. Citigroup shares are up 18% year-to-date in 2010 versus the Standard & Poor's Banking Index being flat (up 0.08%) despite the UST's selling 4.1 billion shares (approximately 14% of Citigroup's outstanding shares).
Institutional ownership of Citigroup shares is up to 43% from 22% last December, implying net institutional investor purchases of 5.9 billion shares. This suggests that institutional net buying year-to-date has been enough to offset the UST's selling and help drive relative outperformance of Citigroup shares.
There appears to be more than sufficient institutional net buying capacity to absorb the UST's remaining 3.6 billion shares. If Citigroup shares owned by institutions increase to the mid-point between Citigroup's current institutional ownership level (43%) and the current peer level (75%) it would necessitate the net buying of 4.5 billon shares.
Bottom line, institutional investor net buying has more than offset UST selling pressure, and there remains sufficient institutional buying capacity for this trend to continue.
-- Jeff Harte
-- Ted Holzman
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