Yeah, again, I agree with the bearish stance on Citi.
The truth is, CDO in and of itself has been a very difficult entity to valuate. So, what Citi (and many other banks in this situation) have done is feed the public with their best case estimate.
That is, until last week, where by federal mandate, the banking industry had to disclose exactly how much subprime they are exposed to PRIOR to estimates.
And of course, when people saw the numbers in its entirety, they practically ran for the hills.
And ALTHOUGH the entire subprime exposure COULD be considered as a total loss, that may or may not be the case still. Again, when it comes down to it, nobody knows for sure.
And again, this is why I am standing firm with my hold. The exposure disclosure represents the worst case scenario. People think it's a total loss, and I can't blame anyone for thinking that way. However, because it also represents the worst case scenario... I THINK (and I could be wrong) that this also the worst of it for Citi.
Which for a ballsy contrarian, is exactly the kind of entry you want into a buy.
That is, assuming that you believe their non-core assets is enough to cover their entire subprime exposure AND that their core banking business is still stable and sound. Which I do, and hence my hold.
One thing is for sure though. Citi isn't for the faint of heart right about now.