Another brand name brokerage may be headed for complete absorption by a long-time rival, in this case Smith Barney. Morgan Stanley is reportedly hungry to devour the chunk of Smith Barney it doesn't already own. That would be the final unraveling of the house that Citi built during the late 1990s in its bid to become the first true global financial supermarket. Its acquisitions of Smith Barney and the Travelers insurance group proved to be so unwise that it has unwound much of what it bought since then just to raise enough capital to survive.
I recall doing a case study of Citi in 2002 for my MBA class in M+A. I was the lone voice in the class arguing that Citi's mergers would prove to be a strategic disaster and I was able to sway my teammates to agree with me. Another team gave a competing presentation arguing Citi's mergers would work out great, relying exclusively on DCF projections and other quantitative estimates without any qualitative assessments of strategic fit. Ah, memories. It goes to show that academic rote only gets you so far. Truly insightful analysis often requires an intuitive leap.
Citigroup would be wise to sell its stake now before the renewed recession hits retail investors' portfolios and Smith Barney's revenue. Oh, BTW, none of these firms ever seriously wanted to hire me so I wouldn't be terribly bothered if they all suffer.
Full disclosure: No positions in MS or C at this time.
I recall doing a case study of Citi in 2002 for my MBA class in M+A. I was the lone voice in the class arguing that Citi's mergers would prove to be a strategic disaster and I was able to sway my teammates to agree with me. Another team gave a competing presentation arguing Citi's mergers would work out great, relying exclusively on DCF projections and other quantitative estimates without any qualitative assessments of strategic fit. Ah, memories. It goes to show that academic rote only gets you so far. Truly insightful analysis often requires an intuitive leap.
Citigroup would be wise to sell its stake now before the renewed recession hits retail investors' portfolios and Smith Barney's revenue. Oh, BTW, none of these firms ever seriously wanted to hire me so I wouldn't be terribly bothered if they all suffer.
Full disclosure: No positions in MS or C at this time.
