The financial stock bought by the most gurus, Citigroup Inc. (C, Financial), announced mostly earnings results Friday, yet the stock became even cheaper.
Eighteen investors followed by GuruFocus had purchased shares of Citigroup in the fourth quarter, with a combined weighting of 32.7%, according to the S&P 500 Screener. T. Rowe Price Equity Income Fund led new buyers with 5.04 million shares, equal to 1.2% of assets managed, followed by Bruce Berkowitz (Trades, Portfolio), who purchased 3.01 million shares, equal to 4.3% of assets managed. More gurus purchased its shares than JPMorgan (JPM, Financial) and America Express (AXP, Financial), its immediate followers on the list.
Yet Citigroup’s share price tumbled 23.5% year to date, more than the broader market decline of 22.24%. Its peers have also had less drastic slides, with Bank of America (BAC, Financial) down almost 18% and Wells Fargo (WFC, Financial) down about 11.5%.
The decline included a 6.5% drop on Jan. 15 when it reported fourth quarter financial results.
Citigroup announced net income of $3.3 billion, or $1.02 per diluted share, increased from $334 million, or 6 cents per share, in fourth quarter 2014. Its revenue also improved, to $18.5 billion, from $17.9 billion. The adjusted results of $1.06 per diluted share and $18.6 billion in revenue beat analysts’ expectations of $1.05 per share and $17.87 billion in revenue, according to Thomson Reuters.
On the negative side, full-year revenue declined 6% to $76.4 billion from the previous year, and loans for the fourth quarter declined 4% from the prior year period, driven by declines at its North America mortgage portfolio and the sale of an asset in the fourth quarter of 2015.
Full-year earnings, however, grew to almost a 10-year record.
"Overall, we had strong performance during 2015,” said Michael Corbat, chief executive officer of Citigroup. The $17.1 billion we generated in net income was the highest since 2006, when our company was very different in terms of headcount, footprint, mix of businesses and assets.”
Citigroup attributed its earnings improvement to higher revenue and lower operating expenses, with a reduced tax rate due to lower legal expenses.
The results also exceeded two of three financial targets Corbat had set in 2013 to reach by the end of 2015. The company exceeded its goal for return on assets and efficiency ratio, and fell short of its expectation but improved return on tangible common equity. Since the financial crisis, Citigroup has focused on becoming what Corbat called “a simpler and smaller company,” exiting 19 markets and reducing its global footprint by a quarter, among other measures, to focus assets on growth areas.
In Wednesday afternoon trading, Citigroup stock is down 4.1% to $40.23 per share, trading below book value of $69.46 per share and tangible book value of $60.61 per share.
Citigroup also had 19 investors tracked by GuruFocus reduce their positions, with three of them exiting: RS Investment Management (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) and George Soros (Trades, Portfolio).
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