Citigroup Shares Surged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of banking giant Citigroup (NYSE: C  ) found some serious buyers today, and the stock jumped as much as 11% in intraday trading on heavy volume.

So what: Today, Citigroup announced that it hired Kathryn Dinkin away from Wells Fargo (NYSE: WFC  ) to head its East region consumer banking segment. What, you're not convinced that this is enough to send shares spiking?

OK, the real reason that Citi's shares are soaring today is the banking industry's huge news: Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) $5 billion investment in much-maligned Bank of America (NYSE: BAC  ) . While Citi doesn't get a penny of this investment, it's benefitting from the afterglow of the confidence boost that came from Warren Buffett's apparent belief in the post-financial-meltdown banking system.

Now what: By tomorrow, everyone will have forgotten about Buffett's B of A investment. That may be a bit of an exaggeration, but the stock market has an extreme "what have you done for me lately" attitude and an event like this is unlikely to have a long-lasting effect. That's not to mention the fact that everything is going to be overshadowed tomorrow by what Federal Reserve Chairman Ben Bernanke does or doesn't say in his speech in Jackson Hole, Wyo.

Is it significant that Warren Buffett invested in Bank of America? I think Buffett's a sharp investor, so I'd say "yes." But is this a good reason to rush to buy Citigroup stock? Nope, you better have some better reasons on your list.

Want to keep up to date on these stocks?

The Motley Fool owns shares of Berkshire Hathaway, Bank of America, and Citigroup. The Fool owns shares of and has created a ratio put spread position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Bank of America and Berkshire Hathaway, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1544295, ~/Articles/ArticleHandler.aspx, 12/19/2014 4:29:32 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement