Citigroup's new friends

So citi raises $7 bill or so from middle eastern friends -- but takes another 6+ bill in charges too. Given the size of Citigroup, $7 bill is a joke -- a rounding error -- and the terms of 11% rate that Citi will pay on the funds till they are converted (if they ever are) is pretty steep -- close to 2X what Citi was paying prior to that deal. That said, Cramer is right -- don't forget the situation is better than it was.

Obviously Citi is in trouble but this move does help some -- I'm not smart enough to say this means Citi is bottoming. I have said repeatedly that financials are to be avoided and I haven't changed my tune -- we have not had the kind of failures that I would have expected given the situation.

Companies with large international businesses and secular growth drivers are the place to be. Last stock I mentioned -- Boom -- can you believe the progress it has made since then -- i.e. since last Tuesday prior to T-day? Its up like 10% since then or at least it seems like it. I never bought.

Latest reading was about ELMG which I read about in my latest Forbes. They provide wireless broadband equipment for aerospace and defense including allowing exec's to surf the web on the corporate jet. The margins are horrible, the returns on equity are bad too but the valuation and growth potential are interesting. The margins have the potential to increase from 6% or so up to 10%, which is more in line with peers. This year the defense side is up 28% after not growing for 3 years prior. The aerospace side is doing great too -- up like 40% but the warehouse logisitics side, which accounts for 50% of revenues is only up 1%. I look at these numbers and I realize that FLIR is that good of a situation. I am still reading about ELMG but so far I'm wondering why this is better that my existing ideas.

Another DNA consummable supply company that I am researching is Qiagen (QGEN) -- similar growth drivers to TECH but the growth is faster and the margins are no where near as good -- but they have been rising. Still need to do some reading to better understand the opportunity that they have. I like TECH but so far the stock has not done as well as I would have expected.

FDS -- this is one that I am wondering when to pull the trigger on -- they are going to report earnings in a couple of weeks so this is a big decision. They are trading at 24X next 4 quarters earnings which is below average but still pretty high. There is a lot of concern that their business will slow and that would hurt the stock but they have no exposure to fixed income which is the area with the most problems. They do have exposure to investment banking (deals), which was a busy area during the buyout binge. I think FDS continues to have a great future -- because they keep adding new functionality and the number of users is still very small compared to the potential pool of users.

So stocks I would like to add to include FDS, TECH, ILMN, FLIR, CLB. Stocks I am thinking about trimming include GGG, MDT, LH, etc. GGG because I am afraid they will no longer be able to keep growth up with the housing area getting crushed. Just figure that LH should be a smaller portion of the portfolio. MDT -- I'm tired of waiting for this pig to ever get moving.

that's enough for tonight -- hope you are holding up well. The secular growth portfolio is outperforming by about 9% this year -- a great year.