The Alpha Algorithm Targets another Big Banking Name

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Although yesterday’s sharp sell-off in the U.S. stock markets may have unnerved some human traders, the Alpha Algorithm continued to generate its recommendations while giving no attention to Mr. Market’s mood swings.

This week’s Alpha Algorithm recommendation is Citigroup Inc. (C). Based in New York, Citigroup is a global financial services company providing its customers with a broad range of financial products and services.

These include consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Citibank also offers fixed income and equity sales and trading, foreign exchange, prime brokerage and equity and fixed income research services.

C 5-18

Citigroup Inc. (C) versus the S&P 500 over one year.

Eight Top Investment Strategies Betting on Citigroup Inc. (C)

  1. Fundamental Strength

Citigroup is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.

  1. Goldman Sachs’ Active Beta

The stock is selected according to four factors –— value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

  1. Value Tilt

Selected using a multi-factor modeling approach, the company is a value stock designed to enhance portfolio risk/return characteristics.

  1. Goldman Sachs Hedge Fund Index

The stock is part of the Goldman Sachs Hedge Industry Index, which tracks an equal-weighted index of the 50 most frequently held U.S. companies selected from the portfolios of hedge funds.

  1. Billionaire Bet

The stock is one of 30 U.S. companies tracked in an equal-weighted index selected from the portfolios of 10 asset managers with a personal net worth of at least $1 billion.

  1. Insider Sentiment

One of 100 equally weighted U.S.-listed large- and mid-cap stocks chosen based on trading in company stock by corporate insiders, price momentum and trailing 12-month volatility. Specifically, this strategy looks at the increase in insider holding.

  1. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

  1. Float Shrink

The company shrinks its float while growing free cash flow and not increasing leverage.


Buy CitiGroup (C) at market today.

Place your initial stop at $54.50.


If you want to play the options, I recommend the C July $60 calls (C170721C00060000), which last traded at $2.37 and expire on July 21.

Portfolio Update

You sold one-half of your Applied Materials, Inc. (AMAT) July $39 calls (AMAT170721C00039000) on May 11 at $4.67 for a 97.05% gain. You then sold your options on May 16 for a 138.82% gain.

You were stopped out of long time holding Home Depot Inc. (HD) on May 11 for a 23.87% gain.

VAA 5-18


Nicholas Vardy

Nicholas A. Vardy

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