Waiting game

27 May 2010 By Antony Currie Follow @AntonyMCurrie

Hedge fund managers like David Tepper and John Paulson are adding to last year’s profitable bets. With many banks at or below book value and loan losses falling, that sounds reasonable. But regulatory uncertainty, euro zone woes and doubledip fears could postpone more gains.

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Hedge fund manager Bill Ackman has bought 150 million shares of Citigroup, he revealed on May 26 at the Ira Sohn Investment Research Conference in New York. At the same event, Appaloosa Management founder David Tepper said he thought Bank of America stock, which closed on May 26 at $15.47 a share, could hit $27 a share. Last week, Paulson & Co, the hedge fund run by John Paulson, revealed in a regulatory filing that it had bought another 16.8 million shares in Bank of America in the first quarter, increasing the fund's holding by 11 percent to 167.8 million at the end of March.

Bank stocks have fallen sharply from their highs of midApril and early May. Bank of America has fallen 20.6 percent, JPMorgan 18.9 percent, Regions Financial by 15.3 percent, SunTrust by 16.3 percent and PNC Financial by 11.5 percent.

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