Beauty and the Beast

One year and 21 days after Meredith Whitney's stardom was launched with her first note of gloom on Citigroup, the bank has fallen into the open arms of the federal government.

Whitney's October 31, 2007 research report predicted a dire fate for Citigroup and an unavoidable, imminent dividend cut. Citi shares plunged (to $33...ah, those were the days!), Whitney received death threats, Citi ousted its chief executive and cut its dividend, and the Oppenheimer analyst was suddenly Wall Street's most adored bear.

The analyst was virtually unknown until her outspoken skepticism on the "too big to fail" bank made her name nearly a household one. And rightly so -- investors who traded on her "underperform" rating by shorting Citi shares last October should be ever so grateful for her candid pessimism.

As her star brightened while Citi's faded, Whitney's bearishness was unrelenting. In an interview published in the New York Post just yesterday, Whitney called Citigroup chief executive Vikram Pandit naïve for saying the bank was adequately capitalized and that its falling share price was of no concern.

And after last night's announcement of a $326 billion bailout of Citigroup by the federal government, Whitney's glass remains decidedly half empty. "We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation," she wrote in a note this morning, reiterating her "underperform" rating on the stock.

But while Whitney may have established herself because of her prescience on the deterioration of Citigroup, her calls have made less of an impact as the rest of the Street joined her bear party. It's a bitter twist of irony that inevitably comes along after you've been proved right on Wall Street.

Citigroup shares are up 60 percent today, but Wall Street is still waiting for a prescient bull to come forward.

by Megan Barnett