• 30 Aug 2010 at 2:34 PM

Mike Mayo: Citi Not To Be Trusted

As mentioned last week, analyst Mike Mayo has been going around telling clients and whoever else will listen that the bank is inflating its profits and needs to a write down $50 billion of deferred-tax assets. For the offense, Citi has, according to Charlie Gasparino, frozen Mayo out. No one-on-ones in Pandit’s office, no phone interviews, and he’s even blocked from Uncle Vik on IM, which has got to chap some serious hide. On Friday, fellow analyst Dick Bové inserted himself into the situation, coming out and claiming Mayo be talking shit, and that Citi is “not cooking the books.” Today, Mayo went on.

“We believe that Citigroup’s financial targets can encourage short-term excesses over long-term prudence,” Mayo wrote in a note to clients titled “A Matter of Trust.” Mayo, an analyst at the securities firm CLSA, added: “Citi has an aggressive financial target of 5% asset growth when so much of its past problems stem from excessive asset growth.”

“Citi’s deferred tax asset — $50 billion — is more than twice as large as any other US corporation and the largest as a percentage of tangible equity among large banks (39%), but it has not recognized any write-down (or related adjustment) even though most other companies in a similar position (3 years of cumulative losses) have taken write-downs,” Mayo wrote. “This position is further supported by news that the SEC has investigated these issues. In short, the company claims no DTA adjustment is warranted based on its projected earnings over the next couple of decades. More importantly, accounting precedents seem to us to warrant that a write-down is necessary. The stakes are raised since the lack of a write-down could lead to investor lawsuits later on.”

Chaz Gasparino reports that Citi has reiterated that everything is cool and that it will meet with Mayo “in due course,” though if they think five minutes in the conference room while VP files his nails and looks bored is going to cut, they should seriously think again. At this point Mike and his Mayo Jar are gonna need to be wooed.

77 comments (hidden to protect delicate sensibilities)
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Comments (77)

  1. Posted by CoveredLong | August 30, 2010 at 6:53 PM

    He looks so Patrick Bateman in that pic.

  2. Posted by Guest | August 30, 2010 at 6:57 PM

    Must suck for one’s surname to be the same as a condiment.

  3. Posted by Pfluger the Barbarian | August 30, 2010 at 7:01 PM

    Not taking a DTA adjustment based on projected profits over the next decade and therby risking investor lawsuits later on despite the SEC previously investigating and (apparently) doing nothing is the NKI.

  4. Posted by guest | August 30, 2010 at 7:01 PM

    I am still reading his lehman upgrade near the collapse, so can I wait to get to this report?

  5. Posted by Tim Ketchup | August 30, 2010 at 7:07 PM

    Why do you say that?

    -Tim Ketchup, III

  6. Posted by Mitch Cumstein | August 30, 2010 at 7:09 PM
  7. Posted by Mike Vick | August 30, 2010 at 7:22 PM

    Catfighting is the new dog fighting.

  8. Posted by Navin Johnson | August 30, 2010 at 7:39 PM

    Pflug- what about cat juggling?

  9. Posted by NamedStadium | August 30, 2010 at 7:39 PM

    I once had a history of bold calls on oil prices.

    Tom K
    Tulsa, OK

  10. Posted by Navin Johnson | August 30, 2010 at 7:40 PM

    erm, my q was supposed to be dorect to Mr. Vick.

    sh*t< shinola

  11. Posted by Graypoupon | August 30, 2010 at 7:41 PM

    No shit.

    G. Ray Poupon

  12. Posted by anon | August 30, 2010 at 7:46 PM

    C’mon Pflunger…. again with the NKI? It’s not happening and as per the previous suggestion (not by myself) please abstain from the expression.

    -the acronym line-drawer

  13. Posted by Anonymous | August 30, 2010 at 7:50 PM

    I disagree.

    Col. Sir H.N.E. Mustard, OBE

  14. Posted by Shallow Thinker | August 30, 2010 at 8:04 PM

    Being a white night about acronyms is the NKI

  15. Posted by Lewis Winthorpe III | August 30, 2010 at 8:04 PM

    My name is Fern Mayo, as in “hold the mayo.”

    -guy who thinks Rose McGowan is underrateed

  16. Posted by Pfluger the Barbarian | August 30, 2010 at 8:33 PM

    In my experience, phrases or expressions which are oft-repeated frequently result in acronyms. “New killing it” has been thrown around much more frequently than “deferred tax asset.” But now its attacked by Acronym cops.

    Until today, has anyone ever heard of a god-damned “DTA”???? No. (Except maybe some geek accountants.) But do the damned Acronym Cops issue any cease and desist orders on DTA? Nope, not a fucking peep. Bastards.

  17. Posted by MBA Cares | August 30, 2010 at 8:46 PM

    Citi will regret going against Mayo and his cold, contrarian balls

  18. Posted by anon | August 30, 2010 at 8:46 PM

    DTA can be dimissed as nerdy, boring, accounting jargon whereas “new killing it” is held to a much higher standard.

    – the acronym cop

  19. Posted by pauly | August 30, 2010 at 8:46 PM

    GTL = DTF

  20. Posted by Ironman | August 30, 2010 at 9:03 PM

    Credit Agricole ????

    Mike Mayo …. Peter Ruel …. = dipshits

  21. Posted by Longer | August 30, 2010 at 9:55 PM

    ask mr. mayo how many firms he’s worked for? ask him why so many.

  22. Posted by Molach | August 31, 2010 at 6:04 PM

    my 2027 number is down 15% YOY but not because of a DTA adjustment. The china investment will require increased amortization starting in 2020.

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