Readers may recognize Karen Finerman’s name from her frequent appearances on financial television. Ms. Finerman is a permanent member of CNBC’s Fast Money financial talk show, held Monday through Thursday at 5 p.m. ET.
Finerman graduated from the University of Pennsylvania’s Wharton School and co-founded Metropolitan Capital Advisors in summer 1992. She currently serves as CEO and co-manages nearly $100 million in assets within her hedge fund. Finerman differentiates herself from the other panelists on Fast Money with her value-oriented approach to investing, and generally maintains a buy-and-hold strategy within the Metropolitan Capital portfolio.
During the fourth quarter of 2012, Metropolitan Capital Advisors increased its exposure to financials and industrials. Let’s take a look at Finerman’s new positions, her potential reasons for investment, and if the original buy-and-hold theses is still intact.
American International Group, Inc. (NYSE:AIG)
Finerman indicated she was a buyer of AIG on television during December when the U.S. Treasury stated it would sell its remaining 234M shares of the company at $32.50. She correctly pointed out that when the government sold its shares of General Motors, the stock rallied afterwards and the offer price hasn’t been seen since.
We’ve seen the same reaction in AIG as Finerman indicated in General Motors Company (NYSE:GM), with AIG shares closing at $38.35 on February 15, significantly higher than the government’s $32.50 offer price.
It seems more upside is in store for AIG, as the Wall Street community continues to view the company favorably. Analysts at William Blair recently stated that they believe now is a good time to purchase commercial insurance stocks such as AIG with earnings potential coming out of a cyclical trough.
For further reading on AIG, please reference Insiders Love This Back from Dead Financial. Shares of AIG have risen approximately 13% since I published the article on December 13.
Citigroup Inc. (NYSE:C)
Metropolitan Capital Advisors also initiated a new position in Citigroup during the fourth quarter. In my opinion, Finerman’s taste for Citigroup improved dramatically upon the departure of former CEO Vikram Pandit. While it’s difficult to cite specific reasons why Finerman didn’t have a preference for Pandit, I’ve gathered this opinion through anecdotal comments she’s made over the last 5 years.
Moving forward to the present, Citigroup has installed Michael Corbat as its new CEO and Finerman is attracted to the bank because it is undervalued relative to others in the sector such as JPMorgan Chase & Co. (NYSE:JPM). Citigroup trades at 0.71x book value based on the most recent data, compared to J.P. Morgan which is priced at 0.95x book value.
Although Citigroup reported lower-than-expect EPS for the fourth quarter, analysts at both CLSA and Oppenheimer have expressed bullish remarks following the January 17 earnings release.