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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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Thu, 06/30/2011 - 12:28 | 1415863 Bindar Dundat
Bindar Dundat's picture

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

Thu, 06/30/2011 - 15:43 | 1416593 ghostfaceinvestah
ghostfaceinvestah's picture

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

Thu, 06/30/2011 - 12:50 | 1415872 Cognitive Dissonance
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.

Thu, 06/30/2011 - 12:29 | 1415874 Fox Moulder
Fox Moulder's picture

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

Thu, 06/30/2011 - 13:41 | 1416151 Stax Edwards
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.

Thu, 06/30/2011 - 14:05 | 1416233 Libertarians fo...
Libertarians for Prosperity's picture

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

Agreed. 

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

Thu, 06/30/2011 - 12:30 | 1415880 apberusdisvet
apberusdisvet's picture

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

Thu, 06/30/2011 - 12:41 | 1415903 A Man without Q...
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...

Thu, 06/30/2011 - 12:38 | 1415904 buzzsaw99
buzzsaw99's picture

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

Thu, 06/30/2011 - 12:46 | 1415917 dracos_ghost
Thu, 06/30/2011 - 12:51 | 1415940 yabyum
yabyum's picture

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

Thu, 06/30/2011 - 14:28 | 1416335 MrBoompi
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?

Thu, 06/30/2011 - 12:51 | 1415942 YesWeKahn
YesWeKahn's picture

Maybe, Paulson should read Zero hedge more often?

Thu, 06/30/2011 - 12:54 | 1415943 Mercury
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.

Thu, 06/30/2011 - 13:09 | 1416031 centerline
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.

Thu, 06/30/2011 - 14:43 | 1416388 CitizenPete
CitizenPete's picture

http://www.sl-webs.com/deesillustration/artwork.asp?item=491&cat=satire

 

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

Thu, 06/30/2011 - 12:52 | 1415950 qussl3
qussl3's picture

Matter of time before redemptions force him to dump GLD.

YUM.

More cheap physical for the rest of us plebes.

Thu, 06/30/2011 - 12:52 | 1415968 TradingJoe
TradingJoe's picture

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

Thu, 06/30/2011 - 13:08 | 1416024 monopoly
monopoly's picture

Sorry, physical here is cheap.

Thu, 06/30/2011 - 13:16 | 1416061 disabledvet
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...

Thu, 06/30/2011 - 13:28 | 1416092 bugs_
bugs_'s picture

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

Thu, 06/30/2011 - 13:45 | 1416164 IMA5U
IMA5U's picture

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

Thu, 06/30/2011 - 14:14 | 1416279 Tunga
Tunga's picture

Tit for tat. 

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

Thu, 06/30/2011 - 14:25 | 1416308 Hedgetard55
Hedgetard55's picture

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

 

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

Thu, 06/30/2011 - 14:40 | 1416359 Temporalist
Temporalist's picture

Paulson should buy out all the silver at the crimex.

Thu, 06/30/2011 - 19:33 | 1417338 BigJim
BigJim's picture

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

Thu, 06/30/2011 - 14:56 | 1416447 Siggy
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

Thu, 06/30/2011 - 15:09 | 1416478 Seasmoke
Seasmoke's picture

June 2011 has not been been a good month for Paulson

Thu, 06/30/2011 - 15:40 | 1416583 williambanzai7
williambanzai7's picture

Dumb diligence...

Thu, 06/30/2011 - 15:55 | 1416647 JW n FL
JW n FL's picture

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

http://www.finalternatives.com/node/17248

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.”

Thu, 06/30/2011 - 16:59 | 1416916 PulauHantu29
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.

Thu, 06/30/2011 - 23:06 | 1417775 Element
Element's picture
Paulson Dumping Bank Of America

 

And they made such a nice couple. :-(

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