C-PN
Citigroup Capital XIII TR PFD SECS
$29.04
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 84.0% below fair value
You pay
$29.04
Bear
$127.22
Fair
$181.74
Bull
$236.26
Bear
$127.22
+338.1%
ROTCE 5.7% → 0.83x TBV
Fair
$181.74
+525.8%
ROTCE 7.6% → 1.78x TBV
Bull
$236.26
+713.6%
ROTCE 8.7% → 2.34x TBV
Key Value Driver
ROTCE (7.6%) vs. cost of equity (6.0%)
Implied Market Multiple
0.9x
Summary
With ROTCE of 7.6% vs. 6.0% cost of equity, fair P/TBV is 1.78x on $32.32 tangible book, implying $181.74 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly