Tagged: Rosenblatt Securities

Citigroup on Liquidity

Would you shrink your share base by 90%? What if it cleared noise out of your trading?

NOTE: See the update on the Issuer Data Initiative at bottom.

Citigroup, market cap $129 billion, plans to trim its 29 billion shares with a 1-for-10 reverse split. Citi float mushroomed from 5.5 billion shares when the U.S. government injected cash through warrants that converted to shares, which the Treasury then unloaded through Morgan Stanley while the Fed quantitatively eased the markets to solid gains.

Resisting the gravitational pull to ask rhetorically why government has power to print monopoly money, pump up its own outcomes, and put paper into one bank but not another, let’s make this Part Two of “lessons in liquidity.”

Last week we discussed the very antimatter to Citigroup, Berkshire Hathaway. BRK.A trades about 500 shares per day, mostly on the NYSE, without high-frequency trading (HFT), for about $127,000 each. There are 1.6 million shares out. Its beta coefficient, a measure of volatility, is lower than every Dow Jones Industrial component save Wal-Mart. (more…)