Today's (First) Blog Entry is on a topic that I read a couple of weeks ago, but never got the chance to report on and inject my views on. As some of you know, I read a wrap up newsletter about the Johannesburg Stock Exchange of South Africa. This wrap up e-mail includes an interesting daily equity report. Sometimes it's only on the local exhange, but sometimes they do a write-up on the US market (or another international market). On the 20th, there was a review of Citigroup's Woes.

The gist of the article is a review of how Citigroup is predicted to have writeoffs of over $15 billion due to the subprime and how Salomon Brothers collapsed due to mortgage based securities and how they fell since they tried to buy more T-Bonds than was allowed. Salomon Brothers was then bought by Travellers, which was bought by Citi. One of those "those who don't learn from history are destined to repeat it" type of thoughts...

The interesting part is how Warren Buffett was a major investor in Salomon Brothers at the time and the author ponders if Mr. Buffett would get involved in Citi. After all, there are a lot of cheap assets in Citi and they are one of the top banks in the world. Once this subprime mess gets straightened out, C should come out of it and become stronger. As we know, Mr. Buffett looks for good companies on the cheap. I don't personally believe that he would get involved in Citi. He has made some new acquisitions for Berkshire including bond insurance and debt from TXU. Also mentioned in the same article is that he has recently upped his stakes in Wells Fargo and US Bancorp (the latter is one I am following for my own portfolios).  It could be interesting since he has investments in those two banks (a midwestern and western bank) and then an east coast bank. It could be something to follow, but I think there's someone else who might make more sense...

Enter Saudi Prince Alwaleed. Many recognize him as the lead investor for Kingdom Holding. Kingdom does own a significant portion into Citi already. The Kingdom Holding site mentions that he owns 14.9% among investments from 1986-1991. They consider Citi one of the crown jewels of their investments, bringing a very high rate of return. Therefore there is the existing interest in Citi. The site also mentiones that they want to expand their relationship with Citigroup and do some co-investments in Saudi Arabia. It seems like a good match, since Prince Alwaleed does like the Citi brand even back before all of the expansion of the brand. Here's a chance to get more while this brand is likely on sale. The interational expansion that Kingdom is thinking about would be easier to make happen, if for nothing else than the ownership would be all under Kingdom.