John Paulson Extends Bet on Bank of America

John Paulson, the hedge-fund manager who made a killing by betting three years against U.S. mortgage markets, raised his holdings in Bank of America (BAC), already one of his top 10, by 11%.

New York-based Paulson & Co., bought 16.8 million shares of BofA and held 167.8 million shares as of March 31, according to a filing with the Securities and Exchange Commission yesterday. Late last year, Paulson told investors that he expected Bank of America’s pps  to almost double in two years, expecting it to rise above $29.00.

Bloomberg: “The large banks were market leaders late last year and early this year before the baton was passed to the more distressed regional firms” such as Huntington Bancshares Inc. (HBAN) and SunTrust Banks Inc. (STI), said Anthony Polini, an analyst at Raymond James Financial Inc. who has a “strong buy” rating on Bank of America. “Bank of America is benefiting from positive trends in credit quality.”

BofA remained Paulson’s second-largest position, valued at nearly $3 billion at the end of 1Q’10.

Last week, Paulson told investors he expects to see a strong economic recovery coupled with a rebound in housing prices.

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