As mentioned in our prior post, institutions are currently overweight the Financial sector (as of the end of June). It's also interesting to see that Paulson & Co., which made billions from shorting the financials and the products they sold, now appears to be taking a very big bet on the sector from the long side. Based on its 6/30 filing, Paulson & Co. increased its weighting in the Financial sector from 2.3% in Q1 to 21.1% in Q2. The bulk of that increase came from its new position in Bank of America (BAC).
During the second quarter, Paulson acquired 168 mln shares of BAC valued at $2.2 billion. This represents 2.01% of the outstanding BAC shares, and it makes Paulson & Co. the bank's fourth largest holder. Relative to Paulson & Co., the BAC stake represents 13% of its portfolio, making it the fund's second largest holding behind GLD (16.7% of the portfolio). Given the large bet, it will be interesting to see if the firm is as successful with financials from the long side as it was on the short side. With BAC already up 20% in the third quarter, they're off to a mighty good start.
Hedging at it's best!
Posted by: kamasutra | October 07, 2009 at 12:35 AM