U.S. Government Looking To Sell Citigroup (C) Stake

After a recent run-up in Citigroups (NYSE: C) share price to the recent $4.50 level, the Treasury department is looking at unloading all of its 33% common stake in the company.

Originally the government acquired preferred stock in the company, but later converted that to common. The shares, since the conversion, have run up about 40% and the treasury now holds about 7.7B shares worth $34.7B at current prices.

The treasury is currently looking at the best way to unload such a vast block of shares. A gradual systematic selling over 6-8 months or a managed "auction" of sorts are two possibilities.

The government still holds a preferred stake in the company as well. Citigroup (NYSE: C) is rumored to be planning a $5B common stock offering to the public to help repay this portion.

One has to wonder how healthy the bank really is, as the recent change in "mark-to-market" rules has most likely artificially propped up reported earnings. The upcoming drag of 33% of the outstanding common being sold on the open market and an additional $5B worth of dilution should give an investor pause before helping bailout the treasury.