Paulson Dumping Bank Of America

Tyler Durden's picture

According to CNBC's Kate Kelly, Paulson has given up on his $30 price target on Bank of America by the end of 2011, and instead has dumped a "substantial stake" in its holdings of the bank's stock. And so, the claims that the hedge fund which has now become the butt of all due diligence jokes, is about to eat more crow, especially as other objective skeptics have long been warning that the bank is massively underreserved for what is about to become a legal fee freeforall following the just announced non-settlement with the BlackRock, Pimco, New York Fed group, and thus a ticking timebomb. But no, Paulson is in it, so it must be a Buy, Buy, Buy. Idiots. Incidentally the market is only slowly getting to realize that the "settlement" announced a few days ago is actually horrendous news for the bank (but confirms that monkey throwing feces move the marginal money) as we said first upon hearing the news.

For much more on what we warned about last year, read Jody Shenn's latest piece: "Moynihan’s 2-Cents-on-Dollar Mortgage Offer Faces Court Hurdle"

And here is Kate Kelly's report:

Investors on Wednesday welcomed Bank of America’s $8.5 billion settlement with disgruntled mortgage-securities holders, sending its shares up 3 percent.

But at least one major shareholder had already taken some of its chips off the table, according to people familiar with its position: Paulson & Co., the $38 billion hedge-fund behemoth.

During the course of the past two months, Paulson sold a substantial portion of its 124 million-share stake in BofA, according to these people. In light of yesterday’s news, firm founder John Paulson may now, in fact, be regretting his decision, these people say, and looking to upsize his holdings in the bank yet again.

The apparent selldown is significant because of Paulson’s outsized influence both in the hedge-fund world and at BofA, where he is the eighth-largest shareholder of record, according to first-quarter securities filings

And as a reminder here is what could go next if redemption notices accelerate as the realization of the obvious dawns on the firm's LPs:

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Bindar Dundat's picture

Paulson has lost it!  He is now selling and investing like an Amateur.....Go short on Paulson. 

ghostfaceinvestah's picture

I was just going to say, might be time to buy BAC.

Cognitive Dissonance's picture

Shouldn't the article title say "Paulson Dumped" as in past tense. News, particularly financial news, is always a rear view mirror driving experience.

Fox Moulder's picture

So Paulson doesn't do so well if he can't rig the outcome, like with subprime mortgages?

Stax Edwards's picture

It certainly appears he is a better con artist than stock picker.  Not sure who wants to invest with a crook anyway, they deserve to lose their ass.

Libertarians for Prosperity's picture

So Paulson doesn't do so well if he can't rig the outcome, like with subprime mortgages?


Collecting 100:1 leveraged death insurance on people whom you've poisoned is far more profitable than old fashioned investing.

apberusdisvet's picture

TBTF means "taxpayers bail the fuckers", need I say more?

A Man without Qualities's picture

I wonder what would happen if it turned out the reference MBS securities used for Paulson's big short turned out to have failed the reps and warranties requirements, so were proved to have never been perfected, thus resulting in all contracts referencing these assets being declared ultra vires.

It is not beyond the realm of possibilities that Paulson would have to pay back all his winnings... now that would be funny...

buzzsaw99's picture

amazing how average he is when not conspiring with the squid to rip off norway teachers.

yabyum's picture

BoA is a dead bank walking. There are more out there, much more.

MrBoompi's picture

I guess if it's true this "settlement" is very bad news for BofA it's also true the largest American bank by assets can't come up with $8.5 Billion without crawling on hands and knees to Uncle Benny and his lapdog loan shark Timmy G.

BofA was bailed out to the tune of $138 Billion. Where is all of that fucking money?

YesWeKahn's picture

Maybe, Paulson should read Zero hedge more often?

Mercury's picture

I actually made a nice trade out of this stock in 2009 near the bottom by simply betting that the government wouldn't let  a big bank named "Bank of America" go under - at least not right away.  Bad optics and all that.

But I never thought it would still be around by now.

And little did I know at the time that no big banks would be allowed to fail.

centerline's picture

I played that one long near the bottom too.  Then went and got short a little too early and gave some back.

qussl3's picture

Matter of time before redemptions force him to dump GLD.


More cheap physical for the rest of us plebes.

TradingJoe's picture

Well, looks like he can't make a "killing" anymore, it's HE WHO GETS KILLED!

monopoly's picture

Sorry, physical here is cheap.

disabledvet's picture

No good deed goes unpunished.  JP was the only hedgie who after blowing up the banks scoopped them up on the bailout news.  I mean "you amass a 200 million share posistion in BofA"!!!  The news is that the equity market has signalled nothing but recovery going on 7 months now--which does indeed make me wonder who's getting annihilated as the market powers higher?  Anyone shorting this thing comes to mind...

bugs_'s picture

when you are not in the insider circle anymore - below average returns

IMA5U's picture

that portfolio proves bigger aint better if you are trying to get alpha

Tunga's picture

Tit for tat. 

Another chair removed from the game as the Music starts up a bit faster this time.

Hedgetard55's picture

" Paulson & Co., the $38 billion hedge-fund behemoth. "


Ha. Bubbles Ben prints up a "behemoth" in about two weeks.

Temporalist's picture

Paulson should buy out all the silver at the crimex.

BigJim's picture

I'm sure he'd rather be broke than dead.

Siggy's picture

Bud Fox: It's two minutes to closing, Gordon. What do you want to do? Decide.

Gordon Gekko: [calms down] Dump it

Seasmoke's picture

June 2011 has not been been a good month for Paulson

JW n FL's picture

Goldman Sachs Board Member Spared any investigation by the SEC... Surprise! Surprise!! Surprise!!!

Gupta SEC Case Postponed Indefinitely” Notice that Goldman Sachs is NOT! in the Head Line?? And is not mentioned until the end of the article..  

Gupta was not called as a witness at Rajaratnam's trial, which ended in his conviction on all counts last month. But his voice was heard in several taped phone calls between the men; prosecutors say that, in one case, Gupta called Rajaratnam only seconds after leaving a Goldman board conference call to tell him that bank had received a big investment from Berkshire Hathaway.”

PulauHantu29's picture

He has one Big Win with subprime but after that his only smart move in this market was buying tons of gold and a handful of gold miners.

Paulson has lost his otuch...sad to see 'm go.

Element's picture
Paulson Dumping Bank Of America


And they made such a nice couple. :-(