Hedge Funds Cut Financial Stocks
Hedge Funds Trim Financial Stock Before Huge Losses
Hedge funds run by John Paulson, George Soros and Steve Mandel cut back on bank shares in the second quarter, before Citigroup Inc. and Bank of America Corp. lost more than one-fifth of their value.
Tudor Investment Corp. and TPG-Axon Capital Management LP were among those trimming banks, according to filings made to the Securities and Exchange Commission by yesterday's deadline. Fidelity Investments, the second-biggest U.S. mutual-fund company, sold 25 million shares of New York-based JPMorgan Chase & Co., or about 21 percent of its stake.
Money managers had been wagering that shares of banks and other financial institutions would benefit from an economic recovery. As the year progressed, some managers got spooked by banks' exposure to mortgages the institutions made before the housing bubble burst, said Manal Mehta, a partner at Branch Hill Capital, a San Francisco-based hedge fund that has short positions on Charlotte, North Carolina-based Bank of America.