THE DOT - if this turns orange or red be alert

Sunday, March 28, 2010

Citi stock gets manipulated on behalf of Treasury

The last 2 weeks Citi stocks exploded due to one obvious reason - if you own reminiscence of a stockoperator you will know if not its the best book one can own being in this business. A pool has been formed Paulson ,Soros and Morgan Stanley on behalf of the Treasury 8 They also own by far the biggest long position in SPY ( despite their warnings in the 800-900 zone that stocks were fragile and biased for a pullback). The have to drop around 30 bil worth of Treasury owned Citi stocks and what you do when you have to place such an incredible amount of stocks is you buy up the stock and try to fabricate a bullish case for those stocks in order to drop it on the fools who buy the scam literally. This were classic manipulation techniques decribed in the abobe mentioned book.
No surprise Liesman and Cramer are covering these stock - 2 of the biggest cheerleaders and ....


Morgan Stanley Will Be Citi Stake Underwriter

Published: Saturday, 27 Mar 2010 | 5:53 PM ET
By: Steve Liesman
Senior Economics Reporter

Morgan Stanley has won a hotly-contested competition among Wall Street investment banks to be the underwriter and advisor on the sale of the U.S. government’s stake in Citigroup, one of the biggest stock sales in history, according to people familiar with the discussions.

Morgan Stanley
Gregory Bull / AP
Morgan Stanley

The bank will be responsible for selling the government’s 27 percent stake in the bank in what is known as a “dribble-out” process that could take the rest of the year. The plan is to sell between 8 percent and 10 percent of average daily volume each day. That will likely begin after Citi reports its next earnings on April 19.

The government received the 7.7 billion of Citi

[C 4.31 0.04 (+0.94%) ] shares in return for billions of dollars of aid given to the bank during the financial crisis. But the government now stands to profit. With a current price of $4.31, the shares are worth around $32 billion, which would leave the government with an $8.2 billion profit. Japan’s Nippon Telegraph and Telephone sale of $36 billion of stock in 1987 would be the only larger stock offering in history.

As the advisor, Morgan Stanley [MS 28.85 -0.06 (-0.21%) ] will be required to set up a process where the government has little discretion over timing. Sources said the government aims to create regular sales that don’t attempt to time or game the market or appear to act on inside information. But sales can be halted if the share prices drops below some price.

As the amount of shares decline it’s possible that a large block of as many as a 1 billion shares could be disposed of in a managed sale or sales, sources said.

It was unclear if Morgan Stanley would be the sole underwriter on the deal. Typically a bank would choose one or more partners, especially a deal this size. Details were still being worked out this weekend, but a formal announcement could come as soon as Sunday.

The government still owns trust preferred in Citi, which it received from providing insurance for the bank’s assets. Those are valued at between $3 billion to $5 billion, but are less liquid than common shares. The government also owns 10-year warrants in Citi stock.

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