Several Catalysts for This Name

Even though I've added several new positions in the past few weeks, I still have a very large cash position. I want to put more of that to work in this great market.

With that in mind, I'm going to begin a new position in Citigroup (C) , the world's largest financial institution, by picking up 800 shares after you read this Alert. As always, my first buy is just a starter. I want to build my position as the opportunity presents itself. It's trading around $53 as I write this.

Citi's shares have drastically underperformed those of its peers since CEO Chuck Prince took over in 2003. That has led to increasing pressure on management, specifically Prince, to improve returns.

Calls for the company to break itself up in order to increase shareholder value have thus far been rebuked my management, which recently highlighted its own plan to help reinvigorate growth at the financial behemoth. Under new CFO Gary Crittenden, the company has outlined its own three- point plan that includes improving returns on capital, managing expenses and investing in higher-growth business. The first part of this plan was the announcement that Citi would cut 17,000 jobs as part of a three-year plan to cut $4.6 billion in expenses.

I believe there are several ways to win with Citi. If the company is successful in turning things around, it could again see the premium forward price-to-earnings ratio it has enjoyed in the past. The stock currently sells for barely 10 times next year's earnings, vs. 12-13 for its peer group.

Better yet, if the new plan proves unsuccessful, I expect the clamoring for Chuck Prince's head would get too loud to ignore and he'd be fired. He's one of the staunchest supporters of the company's current business model, so his departure ultimately could lead to Citi breaking up into several smaller companies. I think a breakup would create considerable shareholder value.

A cheap stock with a known catalyst: Citigroup gives me two ways to win without much downside. In addition, the stock pays a hefty 4% dividend, so I can afford to be patient.

This bet also represents an increase in the portfolio's exposure to financial stocks. If the Federal Reserve does indeed finally cut rates in the second half of this year, financials could really benefit.

Regards,

Jim Cramer

DISCLOSURE: At the time of publication, Cramer had no positions in any of the stocks mentioned in this Alert.

Send email to james.cramer@thestreet.com.