Experts generally agree that Citigroup represents the weakest of the country’s big banks. But that hasn’t deterred hedge fund stars from buying shares in beleaguered Citi.
The group includes George Soros, John Paulson and Eric Mindich. Together, their firms snapped up almost 500 million shares in the fourth quarter. More than 120 hedge funds in total were buyers.
At less than $4 a share, Citi stock is easy to accumulate, Christian Thwaites, president of Sentinel Investments, explained to Bloomberg.
“If the hedge funds are taking any position in it, it’s a feeling that there might be some value to be had.”
Paulson & Co. bought about 206.7 million Citi shares last quarter. Eton Park Capital Management, Mindich’s firm, acquired 138 million shares. And Soros Fund Management picked up 94.7 million shares.
Hedge fund managers may believe that the behemoth bank will be broken up into separate pieces, Diane Garnick, an investment strategist at Invesco, told Bloomberg.
“The sum of the parts is worth less than each individual part,” she said.
“It is easier for investors to assign value to a company if it is broken up into its many component parts. In this market environment, people are starting to reward single business unit companies.”
Others have raised their expectations for Citi, too. Rochdale Securities star analyst Dick Bove upgraded Citi's stock to "neutral" from "sell" after its latest earnings report last month. He has a target price of $3.75 for the stock.
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