Paulson & Co earns $1bn on Citigroup stake

26 January 2011

Paulson & Co, the hedge fund run by investor John Paulson, has earned over $1 billion from its investment in Citigroup.

According to reports, the bank was Paulson & Co’s Advantage Fund’s most profitable investment.

Filings posted to the Securities and Exchange Commission showed that the hedge fund sold an estimated 83 million shares in Citi while retaining another 424 million.

In an end of year letter to investors, Paulson & Co said: “Citigroup demonstrates the upside potential of many of the restructuring investments we have added to our portfolio and our ability to generate above-average returns in large positions.”

The recent decision by the authorities to extend taxes originally implemented during the Bush-era “will be an additional trigger for higher growth in 2011”, the firm explained in its message.

Paulson & Co estimated that the extension should provide as much as $900 billion worth of stimulus to the US economy over the next two years.

Meanwhile, Vikram Pandit, chief executive officer at Citi, recently saw his salary boosted from $1 to $1.75 million after the bank recorded a profit of $10.6 billion for 2010.

By Jim Ottewill

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