NEW YORK, Nov 15 - Hedge fund billionaire John Paulson has made a US$1.45 billion (RM4.93 billion) bet on Citigroup’s eventual recovery, buying 300 million of the troubled bank’s shares.
At the same time, he entirely sold out of his US$328 million stake in Goldman Sachs, and sold down part of the US$2.2 billion stake he took in Bank of America earlier in the year. The fund also cut its stake in JPMorgan Chase by 5 million shares.
Investors have been scrutinising Paulson’s holdings since he reaped big gains by betting that the mortgage market in the United States would collapse in 2007.
The Citigroup stake, listed last Friday in a regulatory filing, marks Paulson’s second billion-dollar-plus investment in a bank that received government bailout funds during the credit crunch.
“If you are guided by what happened to these companies, you would have to think Citigroup is the most problematical of the major banks,” said Warren Marcus, who ran Salomon Brothers’ bank research unit during the 1970s. “Maybe there is a perception that Citi over time has got a better upside than some of the others.”
A spokesman for Paulson & Co, declined to comment.
Paulson ranked second in fund-manager earnings last year, according to Institutional Investor’s Alpha Magazine. His Credit Opportunities Fund soared almost sixfold in 2007 through wagers that sub- prime mortgages would sour. He started the Paulson Recovery Fund last year to invest in financial firms hurt by mortgage writedowns.
Citigroup shares are trading at US$4.05 each, quadruple the low of 97 cents in early March, but below the peak of about US$57 in December 2006. — Straits Times
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