|I'll up my CIT position a little.|
Barron's has a Tueday article headlined "The CIT Value Trap"
"GFI analysts David Kelly and Chris Parkinson advised clients in a Monday advisory that CIT shares look cheap as they trade near the 52-week low, but that things are not what they seem.
The two analysts pointed out that Wall Street has lowered earnings estimates and thus the ongoing risks are not accurately reflected, which suggests a "high risk of a value trap."
"We would need to see a material tightening in CIT CDS spreads before turning positive on CIT shares," Kelly and Parkinson said.
Many options traders believe there is a strong correlation between CDS spreads and options volatility. Implied volatility is driven by put buying, and put prices would increase on credit concerns."
These guys can buy the stock when their spreads tighten materially. I'm buying a little more now on low p/bk.