NEW YORK | Mon Mar 7, 2011 5:12am EST
NEW YORK (Reuters) - Top hedge funds turned conventional wisdom on
its head in the fourth quarter by swapping out Wall Street powerhouse
Goldman Sachs Group Inc (GS.N) for battered bailout survivor
Citigroup Inc (C.N).
Viking Global Investors manager Andreas Halvorsen sold off all his
shares in Goldman while adding to his stake in its commercial banking
rival.
Halvorsen was part of a broad rush toward Citigroup, which finished
2010 as the most well loved holding of the "Smart Money 30," a group
of some of the largest stock-picking equity hedge funds.
Investors are betting on brightening prospects for the third-largest
U.S. bank -- and insulating themselves from the regulatory risk
lynching over Goldman Sachs and other investment banks. Regulatory
restrictions on proprietary trading have mandatory Goldman to close
down some of its operations, and investors are uncertain about how
the firm can grow long-term revenue when its core businesses are
curtailed.
"To the extent that banks are vacant to be restricted from betting on
market movements with their own capital, that makes headwinds to
Goldman Sachs' business model," said Adrian Cronje, chief investment
officer at Atlanta-based wealth manager Balentine, which indirectly
owns bank stocks.
"People are more interested in dull ancient businesses in the
financial sector that take deposits and start high-quality loans," he
said.
Other hedge funds buying into Citigroup or increasing their stakes in
the fourth quarter included Coatue Capital, Eminence Capital and Lone
Pine Capital.
Chilton Investment Co and Lee Ainslie's Maverick Capital sold out of
Goldman.
Not everyone followed the trend, though. Chilton also sold out of
Citi, and Brookside Capital Investors sold out of Citi even as it
raised its Goldman spot nearly 10 percent.
COMEBACK MOMENT
Source: Reuters.Com
