Is Citigroup (C) The Exception Or The Rule?

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Goldman Sachs repeated its opinion that Citigroup (C) is a "sell" and probably would not make a cent until late in 2009. Goldman claims that credit markets are too tough for Citi to make a decent run at getting its write-offs behind it.

Citi’s balance sheet may not look entirely different from those of several other money center banks and brokerage firms. Most made the same risky investment in mortgage-related paper and LBO loans. Most face sharp drop-offs in their underwriting and M&A businesses.

Looking back a month, Citi’s shares are off a bit less than those of Morgan Stanley (MS), Merrill Lynch (MER), and Bank of America (BAC). All four are down well over 20%. From Wall St.’s standpoint, they would seem to be comrades in arms.

The weakness of sell-side research which covers banks is that the analysts must, to a very large extent, guess at what securities are actually on the balance sheets of their subjects. No one has this data in detail beyond the firms themselves and probably the Fed. Some of the securities held by banks are still illiquid so the value of those can only be calculated in theory.

In short, bank research and recommendations are a gamble, even on an analyst’s best day.

Douglas A. McIntyre