Hedge Funds Buying

Hedge Funds Taking Positions in Stocks Again

The recent surge in the stock markets has been a result of the of the ongoing positive sentiments in the global markets. The comments from Nobel laureate Paul Krugman and other experts saying that markets have touched the bottom and it cannot go down further seem to have triggered the markets. More importantly, hedge funds have started to take positions in stocks which they see would generate value in next few years. John Paulson's hedge fund purchased stock in Bank of America and Regions Financial, both banks' stock price rose after Paulson's firm announced the purchase.

Paulson's new positions

Bank of America surged 6.7 percent to $17, the biggest advance in the Dow. Paulson’s hedge fund bought 168 million shares of the company in the second quarter, a regulatory filing showed, becoming the lender’s fourth-largest shareholder.

Regions Financial Corp. rallied 7.9 percent to $5.20 after Paulson bought 35 million shares, becoming the second-largest stakeholder in Alabama’s biggest bank. Financial shares rallied 1.3 percent as a group.

Paulson’s interest in banks comes after his Credit Opportunities Fund soared almost six fold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 percent, compared with a loss of 19 percent for hedge funds on average.

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