The New York Post reports that hedge-fund manager John Paulson, who massively shorted financial companies after predicting the implosion of mortgage markets in ’07 and the collapse of banks in ’08, has been quietly over the past few weeks snapping up shares of banking giant Citigroup (NYSE:C).
Citing unnamed sources, The Post says Paulson has acquired a 2% stake in the beleaguered bank, below the 5% threshold that would require him to file his investment with the SEC.
Although it’s unclear what Paulson’s rationale is for buying shares of Citi, the nation’s most troubled bank, of which the U.S. government holds a 34% stake, according to the paper’s sources – Paulson believes Citi’s assets are undervalued.
One source told The Post that “Paulson sees Citi’s shares trading closer to its book value of $5 to $7 a share, and that he has been scooping up shares in the bank over the past several weeks.”
This news will maybe prompt Wall Street to get a little bit more behind Citigroup, since the man who made somewhere between $3 to $4 billion last year, has now been a big buyer.
A spokesman for Paulson declined to comment, the newspaper said.
In mid-August, reports surfaced that Paulson had acquired a 1.94%, or 167,990,464 share, stake in Bank of America (NYSE:BAC), making him the bank’s largest single investor. Paulson also purchased sizable stakes last quarter in gold producers such as Anglogold Ashanti (NYSE:AU), Kinross Gold Corporation, and Gold Fields Ltd (NYSE:GFI).