Arch-bear Paulson buys up shares in US housing

HEDGE fund managers increased their stakes in financial stocks in the first quarter, showing confidence the US economy is back on a sustainable growth path.

Even hedge fund manager John Paulson, who famously bet three years ago that US housing prices would slide, put his toe back into the homebuilder market.

He bought five million shares in Beazer Homes USA, one of the 10 largest single-family homebuilders in the country, a stake worth about $22.7m (£15.6m).

Beazer, which traded at $73 per share in early 2006, was around $5 for much of the first quarter.

Last week, Paulson told investors he expects to see a strong economic recovery coupled with a rebound in housing prices. He raised his stake in Bank of America and Hartford Financial Services Group, held large stakes in Citigroup and Wells Fargo and continued a love affair with gold.