Citigroup Inc (C) Shares Plunge on Yellen’s ‘Negative Interest Rate’ Comment


The prospects of negative interest rates certainly are not something any bank wants to hear, especially not Citigroup Inc (NYSE:C), but that’s just what was mentioned in comments issued by Federal Reserve Chairwoman Janet Yellen yesterday.

Yellen pointed out that she would not take negative interest rates off the table should the economy see a downward turn.

“I wouldn’t take them off the table but we would have work to do to make sure they would be workable,” she told the Senate Banking Committee in her semiannual monetary policy report to Congress.

While such a move isn’t likely any time soon, especially since the Fed only recently raised rates, investors are seemingly dumping banking stocks on those comments. Shares of Citigroup Inc (NYSE:C) are trading at their lowest levels in well over 3 years. The stock currently seems drastically undervalued with a PE ratio of around 6.5. The stock is down 6.06% or $2.27 following the news, hitting $35.16 per share. Approximately 24.35 million shares traded hands. C shares have declined 29.15% since July 8, 2015 and are currently downtrending. It has underperformed the S&P500 by 20.28%.

From a total of 19 analysts covering Citigroup Inc. (NYSE:C) stock, 10 rate it a “Buy”, 1 a “Sell”, and 8 a “Hold”. This means that 53% of the ratings are positive. The highest target price is $74 while the lowest target price is $4.0. The mean of all analyst targets is $53.88 which is 53.24% above today’s ($35.16) stock price. Citigroup Inc. was the topic of 34 analyst reports since July 21, 2015 according to the firm StockzIntelligence Inc. Portales Partners upgraded shares on January 7 to a “Sector Perform” rating. Macquarie Research maintained shares with a”Outperform” rating and a $64 target share price in their report from an October 19. Oppenheimer maintained C stock in a recent report from January 5 with a “Perform” rating. Jefferies upgraded the rating on September 28. Jefferies has a “Buy” rating and a $60 price target on shares. Finally, Citigroup upgraded the stock to a “Buy” rating in a report they issued on a December 11.

The institutional sentiment decreased to 1.13 in Q2 2015. It’s down 0.15, from 1.28 in 2015Q2. The ratio dived, as 91 funds sold all their Citigroup Inc shares they owned while 412 reduced their positions. 92 funds bought stakes while 477 increased their total positions. Institutions now own 2.17 billion shares which is 0.46% more than the previous share count of 2.16 billion in 2015Q2.

Western Asset Management Co holds 50.69% of its total portfolio in Citigroup Inc, equating to 1.16 million shares. Delta Partners Llc owns 233,500 shares representing 18.24% of their total US portfolio. Moreover, Oldfield Partners Llp has 17.45% of their total portfolio invested in the company, equating to 4.90 million shares. The Arkansas-based Key Colony Management Llc has a total of 14.19% of their portfolio invested in the stock. Tegean Capital Management Llc, a New York-based fund reported 400,000 shares owned.

Citigroup Inc. is a financial services holding company, whose businesses provide consumers, firms, governments and institutions with financial services and products, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services, and wealth management. The company has a market cap of $104.46 billion. The Firm operates through two primary business divisions: Citicorp and Citi Holdings. It has 6.49 P/E ratio. Citicorp consists of the operating businesses: Global Consumer Banking, which consists of consumer banking in North America, EMEA, Latin America and Asia, and Institutional Clients Group, which includes Banking and Markets and securities services.