Portfolio Addition: Citigroup and Huntington Bancshares

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We maintain a public portfolio of stocks I actually own, including the number of shares I bought, when I bought them and the price I paid. This isn’t every stock I own: I have many in my IRA, and a few in my SEP retirement plan. But last year I started this new and completely separate portfolio for use as a tool to periodically talk about investing. THESE ARE NOT STOCK RECOMMENDATIONS! I do my research: you do yours.

In 1990, just before I left my job as a stockbroker to work full-time in television, the nation was going through a real estate/banking crisis similar to the one it’s going through today. It wasn’t as severe in terms of the number of foreclosures or decline in housing prices, but it was every bit as severe in terms of the stock prices of banks. Then, as now, banks (and especially Savings and Loans) were being raked over the coals, despised by the public, called before congress and threatened with increased regulation. There was a taxpayer bailout.

At the time, it was hard to believe bank stocks could ever be healthy again, and their share prices showed it. In 1990, Citigroup was trading at a split-adjusted price of about $2.00. But ten years later, in 2000, the public and congress had long forgotten any issues with big banks. Citi was back in the $40-$50 range. That’s a 2,000% return in 10 years.

And how many shares of Citi did I own? None. Oh, I’d thought about buying them, of course. Who hadn’t? After all, Citi wasn’t going out of business. But it wasn’t that easy to know where the bottom was. (Hint: it never is.) But one day the stock wasn’t 2 any more, it was 4. Then it was 5. Then 6. I told myself I’d buy it on a pull-back, but that pull-back never came and I never bought. So I promised myself something: If the opportunity to buy Citigroup or other quality names at prices like that every presented itself again in my lifetime, I wouldn’t make the same mistake. And as you see when you look at the portfolio I started building last year, that’s a promise I’ve kept.

Last Friday (4/16/10) I bought 2,000 shares of Citi at $4.59: way more than the $2 I could (should) have paid had I pulled the trigger last year, but better late than never.

I think Citibank could easily be a $20-$25 stock 10 years from now. That’s 500% above today’s price. And as for downside? As in 1990, this company is too big to fail, so it’s really more a matter of “when” than “if.”

As for Huntington Bancshares: this Ohio-based regional bank is another stock I’ve been watching for a long time and should have bought when it was less than $4 just a few months back. I also bought it on 4/16/10, paying $5.46. As with Citi, better late than never. And also as with Citi, as to how wise these moves were, only time will tell.

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  • http://www.mmoneyonline.com/ David

    The historical returns look great, but what are the potential impacts of the recent news of possible new financial legislation? Are these companies less likely to be tied to derivatives? I am sure the healthy banks will thrive – just hesitant with all the doom and gloom in the news regarding the finance industry.