Buffet Radar: Buy Citigroup (C)
When Jane Fraser was appointed as Citigroup Inc.'s $C new CEO in early 2021, she immediately set about overhauling the bank's strategy, which had for years resulted in disappointing returns for shareholders. The most significant action was the announcement by Citigroup that it intended to sell most of its international consumer banking businesses, including a sizable chunk of its highly successful Mexican division, Citibanamex.
The bank wants to streamline operations, increase capital efficiency, and concentrate on its wealth management, investment banking, and payments divisions, which are more lucrative. Although the bank is moving forward with the change and doing everything it can to do so, it still seems like a lot of work is needed.
Even yet, there are a few potential catalysts to watch out for in 2023, such as:
- The sale of the Mexico division and
- The return of share repurchases.
The good news is that the stock is so cheap that I believe most negative news has already been factored in. Based on recent share prices, Citigroup also offers a high dividend yield of 4.6%. You'll need to be patient, but you're getting paid through the dividend, and the upside from here may be fairly substantial.
Source: Citigroup's Annual Report 2021