By Joseph Griesbeck, CFA - Editor, Ownership Intelligence
Two US banks reported their earnings today, but each result differed based on their business models with the current market. With many common investors, the two banks have produced opposite trading directions for their shares. Five investors in particular will feel this effect as they belong in the top ten active holders lists for each company.
Q4 2011 earnings fell for Citigroup Inc (C-N), down 11% compared to a year ago, primarily because its investment banking operations suffered from the capital markets conditions. Fidelity is Citi’s top shareholder, owning 4.1% of the common equity, and two of the Capital Group Companies together own 3.7% of the shares outstanding.
Even though it holds less than 1 percent of Citi shares, hedge fund Pershing Square’s $800 million investment in the bank represents 10% of its equity portfolio, according to its most recent filings. It should be concerned that Citi’s 38 cents per share profit missed Wall Street’s estimates of 49 cents, especially after being revised downward from 76 cents per share two weeks ago.
Wells Fargo & Co (WFC-N), on the other hand, saw its profits grow 20% on improved credit quality and loan growth. Its largest shareholder, Berkshire Hathaway, holds 361 million shares worth $11 billion before trading began this morning. Buffett’s WFC position makes up 18% of his publicly traded equities portfolio as of its latest 13F.
Wells Fargo benefitted from the current market by having commercial lending as its biggest sector, and Citi CEO Pandit admitted the bank needed to realign itself in response to the macro environment. Investors in US banks may continue to see similar results as Morgan Stanley and Goldman will announce earnings this week.
See full report here.
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