Paperstand (C, GYI)

The WSJ’s „Heard on the Street” column discusses Citigroup (C), saying that in the last 3 months of ‘06, the level of loans outstanding on the Sears cards dropped 13% to $23bn. That reflects a fall of about 20% from the nearly $29bn of loans on those cards when Citigroup bought the business in late ‘03. The Sears portfolio is just one factor that is weighing on Citigroup. After rallying last month, the co's stock price has lost ground amid investor concerns about rising expenses and the performance of other businesses. Last week, the co ousted Todd Thomson, a rising star at the bank who most recently ran its wealth-mgmt business. The bank needs to find a CFO after announcing plans to move Sallie Krawcheck from that position into the spot held by Mr. Thomson. The performance of the Sears card portfolio is tied to the fortunes of the retailer, which was struggling with sales even before Citigroup bought the card business. Sales at Sears stores open at least a year have been falling for years, and the decline has persisted under the ownership of hedge-fund billionaire Edward S. Lampert. "The issue is not profitability. The issue is growth," says Joe Dickerson, of Atlantic Equities. Based on typical industry growth rates, he ests that the Sears card portfolio should have $32bn in loans. Mr. Dickerson has the equivalent of a Hold rating on Citigroup's stock and a 12-month price tgt of $50.

Barron’s Online “Inside Scoop” section reports that Blum Capital Partners, a private-equity firm, spent $23.6M to buy 547K shares of Getty Image (GYI) on the open mkt through Jan. 18, ’07. The investment firm built up an initial stake of about 1.9M shares in the 3Q06 when the stock lost about a quarter of its value. Blum has since boosted its holdings to more than 3M shares, or 5% of Getty's nearly 60M outstanding. Blum's investment in Getty is valued at nearly $133.7M based on today's mkt price. Getty is Blum's fourth largest holding. Ben Silverman, of InsiderScore.com, notes that as the mkt leader, Getty's pricing model is considered expensive and inflexible compared with smaller players. Getty's beaten-down shares "certainly fits Blum's pattern of using some weakness for position building," Silverman says. He notes that Blum is currently in its third quarter of holding Getty shares and that the firm typically holds positions "for eight quarters-plus." Silverman says that delay "works as a nice hedge" b/c if Getty's result disappoint "they can claim to be an activist after all.