Saturday, September 6, 2008

Barron's most admired companies

Yet, the disdain for the industry evident in this year's ranking has intensified after months of headlines detailing banks' and brokerages' dearth of fear and surfeit of greed, manifested in lax risk controls, excessive debt levels and opaque balance sheets -- the very things that now have the Federal Reserve and the U.S. Treasury in crisis-management mode.

No surprise, again, Citigroup (C) wallows near the bottom of this year's list, in the company of deeply distrusted, state-influenced Russian and Chinese oligopolies. At No. 99, much-maligned Citi is wedged between Russian energy giants Lukoil (LUKOY), at No. 98, and Gazprom (GAZP.Russia), at No. 100.

Written comments from survey respondents reflect the harsh judgment of hindsight. Citigroup "failed to proactively change its business strategy," and is "always chasing strategies." In short, the "company has been a disaster."

THE COMMENTARY on American International Group (AIG), which shuttled to 95th place from No. 30, is no more generous. "Management has no clue," one money manager wrote of the giant insurer.

"Unmitigated disaster with apparently no concept of risk management," another one jeered.

If these are the views of investors who only a year ago voted AIG a solidly above-average company, does it suggest sentiment toward the biggest financial stocks is near a bottom?

Citigroup (C 19.07) has to be put on a buy list. And since we are talking about prominent magazine stories, whatever happened to Meredith Whitney? Wasn't she just on the cover of Fortune magazine last month with her bearish prognostications?

Wasn't C supposed to cut it's dividend to a nickel by now? Remember her interview with Maria Bartiroma where she couldn't give an answer if Lehman would be able to survive? Isn't this stock supposed to be in a casket also? She also said that "the monolines were such an important group and that they would have an additional $40 to $70 billion of writedowns."

Anyone buy MBI, ABK, MTG, SCA, or RDN the last couple of months? You only had 400%, 700%, 250%, 1000%, or 600% returns if you bought into the fear!

She puts a face on fear, but it only looks glamorous. Buying into the fear mongering and making money is a much nicer reward!

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