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Third Point adds stake in Citigroup

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Dec. 4 2020, Updated 10:53 a.m. ET

Third Point’s 4Q14 trade activity

Billionaire Dan Loeb’s hedge fund, Third Point, experienced a great deal of activity in 4Q14. The fund added new positions in Citigroup (C), EMC (EMC), and Phillips 66 (PSX). Third Point increased its stake in Amgen (AMGN), Alibaba (BABA), and eBay (EBAY). The fund’s notable exits in the fourth quarter included Coca-Cola (KO), Bed Bath & Beyond (BBBY), and YPF Sociedad Anonima (YPF). In addition, the fund lowered its stake in Ally Financial (ALLY) and Dow Chemical (DOW).

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Third Point and Citigroup

In the fourth quarter, Third Point added a new position in Citigroup (C) worth $288 million, which is the equivalent of a little over 5 million shares. Citigroup now accounts for 2.60% of Third Point’s portfolio.

Overview of Citigroup

Citigroup is the third largest US bank with assets of $1.9 trillion and ~200 million customer accounts worldwide. It does business in more than 160 countries and jurisdictions. Citigroup provides consumers, corporations, governments, and institutions with a broad range of financial products and services. Its services include consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Subdued trading activity and legal costs affect profitability

Fourth quarter results of Citigroup were well short of investor expectations. Revenues remained relatively flat at $17.8 billion compared to the corresponding quarter a year ago. While net interest margin increased to 2.92% from 2.88% in the prior year due to weak trading activity and higher legal costs, net income fell by 86% YoY (year-over-year) to $350 million. Due to volatility in fixed income markets, revenues from trading fell by 16%.

Citigroup’s further profitability was impacted by $3.5 billion in legal and revamping costs, as the bank had to settle investigations pertaining to currency and interest manipulation. Plus, the company downsized part of its consumer business in the United States, Spain, and Greece.

Citigroup (C) is a component of the Financial Select Sector SPDR ETF (XLF) and accounts for 5.18% of the fund.

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