Why Citigroup Is No JPMorgan

NEW YORK (TheStreet) -- I've been bullish on banks all year and in particular, I have become somewhat enamored with the turnaround story that has become Bank of America(BAC) . However, I have I have no shame in admitting that the $2 billion dollar derivatives loss announced last week by JPMorgan(JPM) has become a significant test on my resolve -- to the extent that I have started to look within the entire sector more closely.

What I have found is that not only are each of the banks different, but the complex nature of how they make money, while it may pose a risk to one is often entirely void of risk for the next. But be that as it may, Wall Street has an uncanny way of trashing apples that are grouped within the same basket -- whether they are rotten or not. But this is where astute investors can often find some gems such as another turnaround story in global money center bank Citigroup(C) .

The magnitude of a $2 billion loss cannot be ignored -- regardless of relation to assets and future earnings. Since the news last Thursday, the entire sector has been down almost 4% to 11.3% YTD -- down from last week's net of 15%. Even more glaring is the fact that at the end of Q1, the sector enjoyed a positive YTD gain of 21.5%.

Though financials have led the market charge for most of the year, it is now under extreme scrutiny and has since been punished mercilessly by investors looking for both shelter and peace of mind. I have begun to realize that one possible way to acquire both while also earning a considerable amount of value is to buy Citigroup -- a name that recently reported excellent profits that topped analysts' expectations. While I am not ready to proclaim that the bank is back from the doldrums of the credit crisis, however, its fundamentals as well as its portfolio of assets suggest that Wall Street has applied a considerable discount to its current value.