Citigroup Shares Fall to the $3 Range (C)

Citigroup Inc. (NYSE:C) shares have fallen below the crucial $4 support level getting as low as $3.87 during today's trading session.  Heading into the lunch hour Citi shares are trading close the normal volume but shares are right at $3.90.

Citigroup shares are consistently the most active stock traded on the NYSE but lately traders have lost interest with volume decreasing and shares just treading water.  Before yesterday's drop of Citigroup (C) shares to the $3 range the stock had only inched up .25% in the past 30 days, however now its down 6.6% thanks to Monday fall.

The American taxpayer still owns 34% of Citigroup Inc. (C) common shares and owes $20 billion in remaining TARP funds. Keep in mind Citigroup has cash reserves of $240 billion.

Is Citigroup too big to fail, how about too big to punish (click to read more)?  Apparently there is some sentiment that some of the largest firms have received SEC get-out-of-jail cards in recent years.  Names mentioned include Citigroup Inc. (NYSE:C), Bank of America Corporation (NYSE:BAC) and American International Group, Inc. (NYSE:AIG).

PRICING CITI

Last month Deutsche Securities put a $5.50 target price on Citi shares implying a 12 month gain of 41% from current levels. But until Citi makes a move on TARP or reducing the 34% U.S. Government ownership, how you could risk buying this stock?

Deutsche put that $5.50 target on Citi shares for the following reasons:
1) Citi seems well-positioned vs. most other banks for both a faster than expected economic recovery or another dip down;

2) the 34% government ownership stake is currently a big overhang, but Deutsche expects it to be reduced soon; and

3) focus will eventually shift to what Citi can earn in a more normal environment and what will be done with excess capital (which could be meaningful over time).

Lastly, D.S. finds Citi shares attractively valued--trading at 1.1x trough tangible book vs. 1.5x for the overall group.

Bottom line -- Citigroup shares belong to the traders and analysts on Wall Street, dare to play?