Seth Klarman (Trades, Portfolio), value investor and the author of "Margin of Safety," purchased a 5,167,000-share stake in Citigroup (C) for an average price of $44.18 per share during the second quarter. The trade had a 2.99% impact on Klarman's portfolio.
Since Klarman purchased a stake in Citigroup its market price has risen by an estimated 8%.
Citigroup has a market cap of $138.7 billion, a price-earnings (P/E) ratio of 10.09, an enterprise value of $223.8 billion and a price-book (P/B) ratio of 0.65.
Citigroup’s history dates back to the founding of the City Bank of New York in 1812. Citigroup is a financial services holding company whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services. It provides its customers with consumer banking, credit cards, corporate and investment banking, securities, brokerage and wealth management. Citigroup has approximately 200 million customer accounts, and it does business in more than 160 countries and jurisdictions worldwide according to its website. Citigroup employed 231,000 full-time employees as of Dec. 31, 2015.
According to GuruFocus Citigroup has a 5 of 10 financial strength rating with a cash-debt ratio of 0.67. The company also has a 6 of 10 profitability and growth rating with an operating margin of 30.11%, a net margin of 20.93%, and EPS (three-year) growth of 30.10% ranking it above 86% of the 1206 companies in the global banks - global industry.
Klarman follows a similar investment approach to the legendary investor Benjamin Graham. He looks for a healthy margin of safety when investing in securities. According to the Peter Lynch chart below Citigroup is trading well below its intrinsic value.
Seth Klarman (Trades, Portfolio) likely purchased a 5,167,000 share stake in Citigroup during the second quarter because Citigroup is the world’s leading global bank with over 200 years of operating experience. The company continues to expand its operations globally, and its trading well below its intrinsic value. According to GuruFocus, Citigroup’s projected free cash flow (FCF) is $171.68, and the DCF calculator estimates Citigroup to be worth $50.94, which provides Klarman a 7.16% margin of safety with his investment in Citigroup.
Disclosure: Author does not own any shares in this company.
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