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.