Paulson gambles on US banking revival
HIGH-PROFILE hedge fund manager John Paulson has taken a bet of more than $2.5bn (£1.5bn) on the recovery of US banks, handing a vote of confidence to a beleaguered Wall Street.
Regulatory filings with the US Securities and Exchange Commission (SEC) show that Paulson bought 168m shares in Bank of America (BoA) during the second quarter, building a stake worth $2.2bn as of 30 June.
His BoA shares look set to net him a tidy profit, with last night’s closing price valuing his holding at $2.86bn, a $660m paper profit since the end of the last quarter.
Paulson’s purchase of shares in BoA will make him the bank’s fourth-largest shareholder, with a 1.94 per cent stake in the bank.
Traditionally, Paulson has been a quiet investor, but he could use his stake in the bank to exert pressure on chief executive Kenneth Lewis, who has already been removed as chairman by shareholders.
The hedge fund guru, who notoriously made $3.7bn betting against the US sub-prime mortgage market, also bought 2m shares in Goldman Sachs and watched their value soar from $295m at the end of June to $329m as of last night.
In a further sign of his confidence in a banking recovery, Paulson also became the second-largest shareholder of Regions Financial with the purchase of 35m shares, and the fifth-largest investor in Capital One Financial, with 17m shares.