Afternoon Review

Citigroup (C) +57.82%
In order to strengthen capital, reduce risk and increase liquidity, C has reached an agreement with the U.S. Treasury, the Federal Reserve Board and the FDIC.

Citigroup will receive another $20 billion from TARP (on top of the $25 billion they have already received) as well as $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the company after shares plunged 60 percent last week.

WSJ.com provided this short summary of terms.

Other financial shares performance today:

• Bank of America (BAC) +27.20%
• JPMorgan & Chase (JPM) +21.39%
• T. Rowe Price Group (TROW) +9.42%
• Raymond James Financial (RJF) +20.35%
• Principal Financial Group (PFG) +24.70%

Arch Coal (ACI) +11.38%, Peabody Energy (BTU) 15.04%
It looks like some people are starting to acknowledge that coal stocks are oversold and long-term fundamentals remain strong. Unlike oil companies whose profits will fall this year after crude futures dropped, coal producers work on long-term sales contracts that cushion them from falling prices. Coal demand across the globe is far less sensitive to economic conditions than other commodities. In addition, long-term trends for global coal demand are quite impressive.

I have said multiple times that coal stocks have been unfairly punished (which is partly due to fund liquidations and a general retreat from commodity related holdings).

This article (which I highly recommend for those interested in ACI or BTU) suggests that others are starting to acknowledge the value in coal stocks.


Johnson & Johnson (JNJ) +1.30%
JNJ announced it will acquire Omrix Boipharmaceuticals (OMRI) for approximately $438 million in cash, or $25 per share. The offer represents a premium of roughly 18 percent over Omrix’s closing price last week.

Omrix will operate as a stand-alone entity in one of JNJ’s companies, and will help provide an opportunity to strengthen JNJ’s presence in active, biologic-based heostates and convergent products for various surgical applications.

The acquisition is expected to be break-even to slightly dilutive to JNJ’s EPS in 2009.


TIPS
Another good article on TIPS, this time in today’s Wall Street Journal “Ahead of the Tape” column.

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Peter Lazaroff, Junior Anlayst