A hedge fund with over $29 billion in assets has made a play to take a significant ownership share in Citigroup (NYSE: C), while selling its entire stake in Goldman Sachs (NYSE: GS) and selling shares in JP Morgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC).
The hedge fund, Paulson & Co, has acquired $300 million worth of Citigroup (NYSE: C) shares. The funds to make the purchase came by liquidating its share in Goldman Sachs and by trimming its stakes in JP Morgan Chase and in Bank of America.
The new Citigroup holding is New York-based Paulson & Co.’s second billion dollar investment in a bank that has received significant bailout funds during the financial crisis last fall. The other major investment that it’s made is in North Carolina-based Bank of America, in which Paulson & Co purchased 168-million shares during the second quarter.
The news bodes particularly well for Citigroup Inc. because many analysts, including Warren Marcus, former head of Salomon Brother’s Bank Research Department, believe that there’s a general perception that Citigroup will have a better upside than its competitors over time, despite being the most problematic of the major banks that have received bailout money.
The move made by Paulson & Co is less than exciting for the banks that were divested from during the transaction, including Bank of America, Goldman Sachs and JP Morgan Chase. Although all 3 of those stocks have made significant recoveries since March, Paulson & Co. and potentially other large institutional investors, believe that there are better growth opportunities in other investments.
