Citigroup - bad news and the share does not a lot. Hmm.

Back in April I talked about Citigroup following their Q1 numbers and concluded that it was theoretically cheap:

'Given the generation of a return on tangible equity of 9.6% during Q1 14 the shares remain up to 15% undervalued i.e. a target price of around US$54 (interestingly as shown in the share price graph at the start of this analysis around the highs for the share in January this year). 

Of course the debate is the variability of this ROTE line (Q413 6%, Q113 10.3% for example) BUT taking into account the simplification story above the capability to sustain/build on such returns is a clear potential scenario for the shares'. 

The not so good news out yesterday morning was the suggestion that Citigroup may pay around US$7bn to settle an investigation by the Department of Justice into mortgage backed securities mis-selling dating almost exclusively to before the global financial crisis.  The final details appear likely to be announced next week possibly next Monday when the Citigroup Q2 earnings are announced.

And the impact on the share from this and other factors over the last three months?  Relatively benign...

Financial stocks remain difficult and horribly specific but this strikes me as an interesting insight.  I remain long of Citigroup going into the Q2 statement.