John Paulson, the hedge fund manager who became a billionaire after predicting the US housing crash, has seen his fund generate $1bn betting on the recovery of US bank Citigroup.
Paulson & Co, the fund he runs in New York, made the disclosure in a letter to its investors, according to Bloomberg News. Bloomberg quotes the letter from Mr Paulson as saying that its investment in Citigroup "demonstrates the upside potential of many of the restructuring investments we have added to our porfolio and our ability to generate above-average returns in large positions".
Mr Paulson sold almost 83m shares in Citi in the third quarter of last year, according to the latest filings with the Securities and Exchange Commission, but still had 424m shares in the bank.
Though Citi's fourth-quarter results fell short of Wall Street's expectations last week, the bank returned to profit last year for the first time since being rescued with $45bn of US taxpayers in 2008. Vikram Pandit, the bank's chief executive, last week had his annual salary lifted from $1 - an amount he had pledged to take until the bank was back in the black - to $1.75m.
Mr Paulson also expects the US economic recovery to accelerate this year thanks to the extension of the tax cuts agreed on by Congress and The White House late last year, Bloomberg reported.
