How the government botched its Citi sale

The timing and execution of the sale were all wrong.

By Jim Cramer Apr 29, 2010 8:52AM
Jim Cramer

By Jim Cramer, TheStreet


No rhyme or reason. That's my feeling about how the government decided to handle its sale of Citigroup (C).

Here's a stock of a company that just reported a good quarter. It had a lot of momentum, and it was distinguishing itself as an international company with really excellent growth and a reformed management.

Any elementary trader, however, would know that until there is clarity -- no matter what kind of clarity -- in financial regulation, banks were going to be tough to buy. Too much uncertainty. So why sell now, when things are most in limbo? Strike one.


Strike two: The government knew that there was going to be a "rake Goldman Sachs (GS) over the coals" session that was meant -- as we know now -- to punish as well as elucidate. These hearings were material facts that were going to turn this red-hot group into ice. Why not wait for a few days?


Strike three: Deciding to sell 1.7 billion shares, a fraction of its total, with Morgan Stanley in a dribble-out rather than a surprise offering that could have been done in a day when strikes one and two had been digested.


Did the government have a death wish? Did it want to lose money?


There was simply no excuse for the way this was handled. None. A travesty.


Bing: More on Citigroup


So we now long holders will have to soldier through some inept selling, with confused shareholders wondering when they are going to get hit over the head next.


Just a poor job. Poor job all the way around.


Random musings: On our flagship site, Dan Freed looks at how damage from the Goldman hearings could spread to other major financials.


At the time of publication, Cramer was long Goldman Sachs.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


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