Setting record straight on Citi investment
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The bigger issue is: Should Singapore participate in the global economy? Or should it be more like Cuba and North Korea, at one extreme? This is really a much bigger topic than the original posting I started.
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Familiar MO.
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citi is a good share if it can survive lah.. so 2 yr run the road... some arse will come here and say "u see lah GIC so smart leh.. earn so much" ... but to mi.. it's still fcuk up investment lah.. knn..even my grandma can easily make a 300% return if she go buy any stock now lor.. knn...
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Originally posted by I-like-flings(m):
citi is a good share if it can survive lah.. so 2 yr run the road... some arse will come here and say "u see lah GIC so smart leh.. earn so much" ... but to mi.. it's still fcuk up investment lah.. knn..even my grandma can easily make a 300% return if she go buy any stock now lor.. knn...
Problem is, they buy at the wrong time.
We are just a variation of a centrally planned economy.
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The issue here is : we are being told constantly we are paying top dollar for top talent.
Then why are there so much problems in society and the economy if the top talent is managing the country properly?
Without even refering to specific issues, if the case was we are being managed by the best talents that are better than the governments of other countries, we would expect that singapore have less problems on average than the rest of the countries.
Furthermore, singapore is a small country. Managing it should be even less of a problem than say managing the US.
But I think we are digressing on the citi investment topic, so I think I will leave this as my last food for thought post.
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Problems?
What problems?
There are no problems in sunny Singapore, it's a Utopia here.
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Originally posted by deepak.c:
Problems?
What problems?
There are no problems in sunny Singapore, it's a Utopia here.
Yes, Singapore is the Utopia created by Singapore's Meritocratic Elites, who have the creative intelligence to pay themselves millions in their self-created legitimacy.
In the process of creating their Utopia, the clever Meritocratic Elites will also create an environment that encourages everyone to make an ‘Escape from Paradise’
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Hurrah..manage to buy 10,000 of Citibank shares in March at USD 1.22 and still holding for the long haul..let's not quarrel whether GIC make or lose $$$..got a safe bet from a banker and fund manager...to buy and collect as many EPURE shares as possible before May 18 ex dividend date and EPURE will pay SGD $8 per lot,and base on its current share price of 44cts that works to a yield ofabout 1.8% better than the miserable bank's deposits of 0.8% considering the fact that one will receive dividends of $8 on May 29.. So far the banker and fund manager has asked me to buy Cosco,China Aviation Oil,Straits Asia Resources and after their respective ex-dividend dates all counters listed above soar..not bad got capital gains and dividends.. Hurry if got spare cash can consider buying EPURE and price below 50cts and unlikley U'll lose $$$..EPURE ever hit a high of $2.52 before its 1 for 3 stocksplit..and with its contracts worth > 1 Billion,this waste treatment/specialist firm is set to soar again
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Originally posted by Camb76:
There are lots of "financial experts" who comment about this or that investment without really knowing the real details. So let's set the record straight. If you cannot understand what is written, then I'm afraid I can't explain it any simpler.
When GIC invested in Citi, it was to buy preferred stock yielding 7% a year. It is more akin to a bond investment than a stock investment, as people invest in preferred stock more for yield than capital gains, unlike common stock investments. To repeat, preferred stock is NOT the same as common stock.
In late February 09, GIC converted the preferred stock holdings in Citi into common stock at an exchange price of US$3.25 a share. This deal was cut when the US government injected capital into Citi. The Citi stock price that GIC invested in is US$3.25.
As of last night closing, Citi common stock was trading at US$3.81. Hence, there has been a PROFIT of 17% in the Citi investment.
Yes, the UBS investment is still underwater. But at least our national wealth has been increased in the Citi investment, as of today that is. But with the US government now actively supporting Citi, I do think the worst for the company is probably over.
Thread starter said: "There are lots of "financial experts" who comment about this or that investment without really knowing the real details. So let's set the record straight. If you cannot understand what is written, then I'm afraid I can't explain it any simpler."
What he means when he said "So let's set the record straight" is, he is starting a thread to try to fool everyone but he forgets that this is not The States Media and propaganda by running dogs will not work.
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Recently all stocks bought SAR,Cosco,CAO,BengKunag which went ex-dividend 15-20may,all move up..capital gains and dividends. Epure is going ex-divid 18Mon May..so by this fri may 15 can still collect..after ex normally move higher,DBS Vickers has target price of $1.07 for this counter
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Originally posted by charlize:
Coincidentally, maybe you can explain why billions of dollars of the country's money can be used to gamble on these risky investments. But trying to get a small portion of it to benefit singaporeans directly through good workable assistance programs or to help the poor and unemployed is like trying to squeeze blood from a rock.
You can squeeze blood out of a rock, serious, it helps if your rock is serrated.
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Originally posted by Camb76:
Charlize, you raise a fair point. As I have mentioned, I do sympathise with the thought that GIC's investment portfolio should be a lot more transparent. At the very least it would cut down on some of the crazy ignorant posts about how much this or that investment is losing money. On the other hand, the Temasek portfolio and returns are relatively very transparent. You can find their annual financial statements online. So it's not a totally empty glass problem. Perhaps a glass one-third or half-full. But yes, things could be much improved on this count.
On your point of grouses "on the ground." I will say I understand, but it is also something I do not share partly because of my situation and partly because of what I have seen globally.
I have lived in 3 continents. When I say lived, I mean staying put in a country for more than 12 months straight. I also have a relatively good life, some might even say I'm "rich" though I don't feel rich for sure. I have a good and interesting career that has allowed me to travel and live around the world. Right now my apartment is in the middle of a major global city, just across the street from a park. Spring is out where I live. The sun is shining, the birds are chirping and flowers are sprouting. So unlike maybe other people I'm not in a constantly angry state of mind, thinking that the world owes me a living. Incidentally, I wasn't born rich but have come where I have come through intelligence and ambition.
What am I trying to say? Anyone who has lived in NY, London, HK or any major global city finds the same sentiments among the, let's just say, "lower middle classes and below." People compain about immigrants taking their jobs, about an unresponsive government, about their low wages, about the inadequacy of public service, about the "elites" perpetuating themselves etc etc. At least in Singapore, you don't complain that much about taxes as they are relatively low for a developed country, but I admit there are other different grouses. People in Singapore also take for granted the superior public amenities they enjoy. For example, good luck if you have no health insurance in the US! Have you ever tried waiting for outpatient treatment at public NHS clinics in the UK?
So I'm sorry to say that what people "on the ground" complain about in Singapore is, in my perspective, nothing really special. I have seen it all overseas. It's largely a function of the world we live in nowadays. Economic globalisation implies a lot more immigration and greater social divide. This is true around the world, and not just Singapore.
Oh Pfffttt ! What are you.. another bubble boy ?
Sure.. ya don't have to give a shit about what "people on the ground complain about... because you are rich and worldly.. my foot.
Another of the " get out of my uncaring elitist face" idiot.
Ya know.. people here can see through your narcissistic bullcrap.
" Oh.. I am so rich".
"Oh.. I live in a BIG city."
"Oh...I have not seen poor people on my streets .. EVAR..(gay)"
"Oh.. get over it.. that's just life you low class crapolar, there's a trash can over there."
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Perhaps you can factor in the exchange rates. At the conversion time it is USD1.00 = SGD1.53, currently at SGD1.46. That would have effective cancelled the so call "profits". In business, the bottomline is show me your cash.
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Originally posted by Chew Bakar:
Perhaps you can factor in the exchange rates. At the conversion time it is USD1.00 = SGD1.53, currently at SGD1.46. That would have effective cancelled the so call "profits". In business, the bottomline is show me your cash.
Singaporeans will never see the cash.
Whether they make $1 or $1 trillion.
Really.
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citi's market cap is around US$ 22 billion today. GIC owns about 11% of Citi which is about US$ 2.3 billion.
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The market cap you see only captures the value of the outstanding common equity at present. Once the conversion of the preferred stock into common equity has been finalised, the market cap will jump. The relevant part of the press release by Citi on this matter is below (I have pasted the full press release in an earlier thread):
"This transaction could increase the TCE (Tangible Common Equity) of the company from the fourth quarter level of $29.7 billion to as much as $81 billion, which assumes the exchange of $27.5 billion of preferred securities, the maximum eligible under this transaction."
So the deal to convert at US$3.25 a share has been formally announced, but it has not been affected yet. There is usually a lag of a few months between the announcement and the implementation in these sort of deals. Lots of legal matters to finalise and documents to file with the relevant authorities. Hence, the market cap you cite does not capture the conversion yet.
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Merrill Lynch aka known as Bank of America... bought at ~26
BAC 12.94 -1.23 -8.68%
now at ~ 10
Don't forget opportunity costs and interests lost...
Curse the dishonorable despot and cronies for taking massive amounts of public money... for their own pockets and gambling with it.
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Don't think of the short term loss lah..over the horizon of 3-5 years or may be longer Citibank shares will definitely recover..investment carry risks otherwise put with banks better although other countries' bank may also collapse.. I bought Citi at USD $1.22 also intend tohold long term..now consider another stock which hope to share with those interested. One or two rotten apples doesn't mean the rest are bad..rg Cosco,YZJ,and Epure esp the latter..I attended the AGM and spoke to the directors during the session and teabreak...they also got auditors on hand to testify the cash on hand..since ipo has been paying dividends,anyway the major shareholder is the International Finance Ltd..also bankers and fund managers also highly rate this counter..low risk at about 44cts...ever even bought at $1.20 and sold at $2.10 too..the counter has beeen adjusted 1 for 3 stock splilt to increase its liquidity so continue to remain high on institution's radar
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Camb76, are you certain that a company's market cap could be increased by issuing more equity, in this case converting pref shares into common equity ??
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My gut tells me.. there's gonna be some major sell off that's gonna plunge big Citi .
But then again.. maybe I'm just hungry.....
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Jim Roger,the financial expert,who is now a S'pore PR remarked SG went in too early to buy BOA,UBS,Citi...probably out of favour to save these co.... But for us it's better to think of our own pockets..time to load up more on EPURE before ex-dividend date and also to buy China Aviation Oil-after its previous trading oil deriative loss of S$550mil and its CEO jailed and released in S'pore,the co's corporate governance and transparency shd now not be a problem..load up on these 2 counters to make some coffee money
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The stupidity of TS position is that we are being advised to forget about the fact that GIC had paid US$26.35 per Preferred Share that cost Singaporeans US$6.8 BILLION.
TS is expecting us to accept a new beginning for these Preferred Share to be converted to Ordinary Shares at a price of US$3.25 per Ordinary Share.
At US$26.35 per Preferred Share that cost Singapore an original investment of US$6.8 Billion - Singapore had received 258,064,516 shares.
This conversion is a ONE-for-ONE share exchange that will result in a total loss of US$5 Billion to Singapore.
This is not a situation that Singapore will get US$6.8 Billion worth of Ordinary Shares valued at US$3.25 that will inflate our holding from 258,064,516 to some wrongly hoped for stock volume of 2,092,307,692.
The fact that should not be forgotten is that the original lot of 258,064,516 Preferred Shares - which originally cost US$26.35 per share - will no longer have the status of being "Preferred" - but will be downgraded to "Ordinary Shares" valued at US$3.25.
TS is telling us to forget about the original value paid, and to rejoice at the current increases in the value of the shares - with the current advancement of the stock values from US$3.25 to US$3.85 per share.
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Originally posted by Atobe:
The stupidity of TS position is that we are being advised to forget about the fact that GIC had paid US$26.35 per Preferred Share that cost Singaporeans US$6.8 BILLION.
TS is expecting us to accept a new beginning for these Preferred Share to be converted to Ordinary Shares at a price of US$3.25 per Ordinary Share.
At US$26.35 per Preferred Share that cost Singapore an original investment of US$6.8 Billion - Singapore had received 258,064,516 shares.
This conversion is a ONE-for-ONE share exchange that will result in a total loss of US$5 Billion to Singapore.
This is not a situation that Singapore will get US$6.8 Billion worth of Ordinary Shares valued at US$3.25 that will inflate our holding from 258,064,516 to some wrongly hoped for stock volume of 2,092,307,692.
The fact that should not be forgotten is that the original lot of 258,064,516 Preferred Shares - which originally cost US$26.35 per share - will no longer have the status of being "Preferred" - but will be downgraded to "Ordinary Shares" valued at US$3.25.
TS is telling us to forget about the original value paid, and to rejoice at the current increases in the value of the shares - with the current advancement of the stock values from US$3.25 to US$3.85 per share.
kekekeke... I thought TS was quite a crack up...perhaps his fancy loft in the middle of spring flower city was just another figment of his imagination afterall....no ?
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I'm not going to reply to ignorant self-deluded posters who seek comfort in opinions rather than facts.
As for Daddy!!'s question, the press release below was released by Citi. Ask your neighbourhood investment banker for his/her advise if you don't fully understand it.
Citigroup Inc. (NYSE: C) March 19, 2009
Citi Files Registration Statement for Exchange Offer
Reaches Definitive Agreements with Private Preferred Shareholders
NEW YORK – Citi announced today it has filed a registration statement with the Securities and Exchange Commission (SEC) in connection with its proposed offer to issue its common stock in exchange for publicly held convertible and non-convertible preferred and trust preferred securities. Citi anticipates launching the public exchange offer in early April, subject to completion of the required SEC review process.
Citi plans to file shortly two preliminary proxy statements with the SEC. One preliminary proxy proposes to amend Citi's Charter to, among other things, increase the number of authorized shares of its common stock and authorize the Board of Directors to execute a reverse stock split of its common stock. Shareholder approval to increase Citi's authorized shares is not necessary to complete the exchange of private preferred shares for interim securities or to exchange the public preferred shares for common shares. The conversion of interim securities to common shares will be completed upon adoption of the amendment to authorize additional shares. The other preliminary proxy proposes to amend the Charter and the certificates of designation of each series of its public preferred stock to amend the rights of holders of public preferred stock.
Citi also has entered into definitive agreements with all of the private holders of convertible preferred securities with an aggregate liquidation value of approximately $12.5 billion that were issued in January 2008. These definitive agreements reflect the terms committed to and announced by Citi on February 27, 2009. Completion of the private exchange transaction is subject to customary closing conditions, including receipt of required regulatory approvals and completion of the exchange with the U.S. Treasury.
Citi is in the process of finalizing definitive documentation of the U.S. Treasury's previously announced commitment to exchange a portion of its preferred securities with an aggregate liquidation value of up to $25 billion for interim securities and warrants.
As announced on February 27, 2009, Citi is seeking to exchange approximately $27.5 billion in public and private preferred securities with a commitment from the U.S. Treasury to convert up to an additional $25 billion of its preferred securities for common stock. Assuming full participation of public preferred shareholders, Citi will convert into common shares approximately $52.5 billion in aggregate liquidation preference of preferred shares.
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Daddy!!,
The market cap you cite only relates to the common equity part of a firm's capital structure. But firms, in Singapore or US or UK etc., are capitalised from many other types of capital. There is common equity, preferred stocks, senior debt and junior debt. These are the four main categories of funding for a listed company. You see them on the right-side of the balance sheet, if you understand accounting. For a bank, the common equity portion of the capital structure usually tends to be very small. That is why banks are typically viewed as being highly "leveraged" companies.
In the case of Citi, its total assets according to its latest fourth quarter 2008 financial statement is US$1,938,470 mln. Obviously this could not have been funded out of only the common equity pool alone as it would have been much too small!
What this means is that there is no change to the total equity number on the right-side of the balance sheet when you convert existing preferred stock into common equity. In an accounting sense you are simply changing the categories of equity. There are legal and economic consequences however. Common equity, for example, has a lower claim on the company's assets than preferred stock or debt, so common equity owners loss everything in a bankruptcy.