Hedge Funds Bank Bets

Hedge Funds Back Away from Banks After Previous Big Gains

Some hedge funds made huge gains betting that banks like Bank of America and Citigroup would not fail in the aftermath of the financial crisis. Now, hedge funds appear to be walking away from that bet. Many hedge funds are backing away from banks trying to get out while the going is good, suggesting a fear that the major banks are headed for rough waters.

The recovery of Citigroup and Bank of America provided famed hedge fund managers like Lee Ainslie and Jeff Altman some of their biggest gains last year, but now the smart money is getting out while the getting is good.

With Ainslie's Maverick Capital, Altman's Owl Creek Asset Management and other major funds backing away from the banking sector in the first quarter, financials suffered the biggest decrease in sector holdings among the Smart Money 30, a group of some of the largest stock-picking hedge funds.

Ainslie, Altman and Stephen Cucchiaro's Windhaven Investment Management dumped their entire holdings in Citigroup and Bank of America during the quarter, according to data compiled by Thomson Reuters.
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