GO
Loading...

John Paulson Pared Bank of America Stake Before Settlement

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

John Alfred Paulson, president of Paulson & Co., Inc, listens during the House Oversight and Government Reform Committee November 13, 2008 in Washington, DC.
Tim Sloan | AFP | Getty Images
John Alfred Paulson, president of Paulson & Co., Inc, listens during the House Oversight and Government Reform Committee November 13, 2008 in Washington, DC.

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.

An enormous money manager with an enviable track record in recent years, Paulson has made waves since the financial crisis with his bullish view on the U.S. economy, a position he has reiterated at recent investor meetings in Las Vegas and Paris.

Selling off a substantial portion of his BofA stock, which has been a key element of his economic-recovery thesis, could raise ticklish questions for Paulson, both about his view of the bank and his broader take on the prospects for U.S. growth.

A Paulson spokesman had this to say about the purported BofA sales: “While we don’t comment on positions between public quarterly filings, we believe it is positive that Bank of America is seeking to put legacy mortgage issues behind it so that investors can focus on the power of future earnings.”

Follow Kate on Twitter: @katekellycnbc


Watch Kate Kelly weekdays at Noon ET on CNBC's "The Strategy Session."

Questions? Comments? Write to kellycomments@cnbc.com