What Famous Portfolio Managers Are Doing With Citigroup

 |  Includes: BAC, C, FDO, GGP, ITT, JCP, JPM, PNC, WFC
by: The Keating Letter

Citigroup shares dipped to 52 week lows over the last few weeks before rebounding with the overall markets. That dip occurred after the end of the Q2 reporting period. In fact, shares are down about 25% since the end of Q2. Citigroup shares were cheap even before the recent price drop. Now, they’re trading at a price to tangible book of 0.66 and a price to book of 0.51. Even with the problems in financials, these valuations are absurd. Thirteen F filings are now out for hedge fund managers, and mutual fund managers have released their holdings and major trades from the last quarter. Let’s take a look at what some of the more famous portfolio managers are doing with this stock.

Bill Ackman: Pershing Square Capital’s Bill Ackman is one of my favorite hedge fund managers. He takes concentrated positions and often acts as an activist. Rather than being confrontational, Ackman prefers to take his case to the Board and management and convince them to make changes by the logic of his ideas. I wrote about Ackman’s top holdings in June, one of which was Citigroup. His 13F filing for Q2 came out and he significantly increased his Citigroup holdings from 14.7 million shares to 23.5 million shares in the quarter. He also raised his stake in Family Dollar (NYSE:FDO), General Growth Properties (NYSE:GGP), and J.C. Penney (NYSE:JCP). Ackman has owned Citigroup shares since Q2 2010.

John Paulson: On the other side of the trade is John Paulson. Paulson sold 7.8 million shares of Citigroup in Q2 and now is left holding 33.5 million shares of the bank. He’s been cutting his ownership in a host of financials, including starting to dump his big stake in Bank of America (NYSE:BAC). Performance in Paulson’s main funds have been poor this year as he acknowledged that he was too early in foreseeing an economic turnaround that would have benefited his financial holdings. On the other hand, he did increase his holdings of Wells Fargo (NYSE:WFC) warrants.

James Barrow: Barrow may not be as well-known as some of the other investors listed here, but this mutual fund manager is a great stock picker and has fantastic long term performance. He dramatically increased his Citigroup holdings in Q2 from about 2 million shares to nearly 20 million. He’s traded around the position before, selling 9.3 million shares in Q4 2010, but he’s never held this many Citigroup shares before.

Leon Cooperman: The Omega Advisors chairman liquidated his holdings in Citigroup in Q2, selling his entire stake of about 800,000 shares. Cooperman also had sold out of his Bank of America holdings in the quarter. He’s not negative on all financials, though. He bought a few J.P. Morgan (NYSE:JPM) and PNC Financial (NYSE:PNC) shares in the quarter.

Bruce Berkowitz: Other portfolio managers have wavered in their faith in financials, but not Berkowitz. He bought about 500,000 shares in Q2. The stock makes up 8.5% of his portfolio. I noted his large ownership in June, and he’s said and done nothing to indicate he’s lost any faith in the investment. It can be assumed he feels similarly about Citigroup as he does with Bank of America, which he continues to promote including holding this recent conference call with CEO Brian Moynihan.

Michael Price: Price runs the hedge fund MFP Investors and is a great portfolio manager to watch. Price increased his Citigroup holdings by about 10% in Q2. I noted it was his second largest holding to ITT after Q1, and that remains the case after the Q2 filings. Price’s portfolio is smaller than the others listed here and he owns about 800,000 Citigroup shares.

Disclosure: I am long BAC, ITT.