What is it about substantial positions that have been taken in Citi by hedge funds over the past quarter.that makes it attractive? I'm all about value investing, and three bucks a share is pretty cheap, but I had to say I was a little surprised by the
120 different hedge funds, including those run by the likes of George Soros and John Paulson, have loaded the boat with a stock that certainly looks like a POS performance-wise. Paulson's fund increased their Citi holdings to over 500 million shares,bought 138 million shares, and Soros upped his ante to about 100 million shares. What do these guys know that the rest of us don't?
Purchases of Citi by hedge funds outpaced sales by more than 10 to 1, and the various portfolios added a net 1.2 billion shares of Citi in the last quarter. Is a break-up of Citi in the works?
Hedge funds may be speculating on a break-up ofinto individual businesses, according to Diane Garnick, a New York-based investment strategist at Invesco Ltd., which manages about $400 billion.
“The sum of the parts is worth less than each individual part,” said Garnick. “It is easier for investors to assign value to a company if it is broken up into its many component parts. In this market environment people are starting to reward single business unit companies.”