Investment legends John Paulson and Warren Buffett have taken opposite paths when it comes to SunTrust Banks, the country’s seventh largest lender.
Paulson, head of Paulson & Co. hedge fund, increased the fund’s ownership stake to 6.1 percent of SunTrust, or 30.4 million shares, in the fourth quarter, making it the bank’s biggest shareholder.
Buffett, meanwhile, trimmed the holding of his Berkshire Hathaway to 2.4 million shares, leaving it with less than a 1 percent stake.
Paulson, who solidified his reputation by selling mortgage securities during the collapse of 2007-08, sold shares in SunTrust rival Regions Financial while he was buying SunTrust.
“When you look at the list of Buffett’s banks, almost everybody has a sterling shine,” Jaime Peters, an analyst at Morningstar, told Bloomberg.
“Paulson sold one troubled bank to buy another.”
SunTrust posted a $1.56 billion loss for 2009. Peters doesn’t have a buy rating on SunTrust or Regions Financial.
In a reversal of his 2007-2008 play against housing, Paulson has now amassed stakes in several banks beaten down by their activity in housing, including Bank of America and Wells Fargo.
Meanwhile, Paulson is having trouble attracting investors to his new gold hedge fund.
"I am a long-term believer in inflation, but I feel the weakness in the economy in the short run will trump the longer-term story" for gold, Christopher Zook, who invests about $150 million in hedge funds, told The Wall Street Journal.
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