Rochdale Securities analyst Dick Bove says Goldman Sachs and Citigroup are good buys now despite the obstacles both companies face.
Citi continues its rebound and could see its shares nearly double in price to $8.50, according to Bove. "If you're looking at the fundamentals alone, the stock should be a buy," Bove says. Citigroup stock recently traded at about $4.18.
“There’s plenty of indication that (Citigroup Chief Executive Officer) Vickram Pandit has turned this company around," he says. “I think there’s earnings power of 70 cents a share in the company,” he told CNBC.
Bove wants to see a management change at Goldman. The firm's stock recently traded ar $148.19.
"The company hasn't protected its franchise properly," he says. "I think that's extraordinarily bad and something has to be done about it," he says.
"You've got to bring in some outside legal expert to write a new mission statement or the company to show ... that there is an epochal issue that has to be brought out and that epochal issue has to be dealt with by the company."
Bove sees the damage caused by the SEC lawsuit against the investment bank as “very bad.”
"The issue in my view is not the specific transaction. The issue is why did they pick on Goldman?" asked Bove, adding that other institutions such as Bank of America and JPMorgan Chase were larger players in the collateralized debt obligation market that traded the lower-quality mortgages.
The U.S. Treasury plans to start selling off its stake in Citigroup the latest step in the Obama administration's effort to end unpopular bailout programs, Reuters reports.
The government acquired 27 percent of the bank's shares when it gave Citi $45 billion in bailout money in 2008 and 2009. Citi has paid back $20 billion in preferred shares, but another $25 billion was converted to common stock last year.
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