Paulson Hedge Fund Sees BofA Almost Doubling by End of 2011
By Saijel Kishan
Nov. 17 (Bloomberg) -- Paulson & Co., the hedge fund firm run by billionaire John Paulson, expects Bank of America Corp.’s stock to almost double in the next two years as writedowns abate, according to a letter sent to investors.
The bank, ranked first by assets and deposits in the U.S., may rise to $29.81 by the end of December 2011, Paulson said in a quarterly letter sent to investors. Paulson expects “banks will have passed the current writedown cycle and have visibility for growth in 2012,” the letter said. Bank of America closed at $15.77 in New York Stock Exchange composite trading.
Paulson reversed course this year by investing in Bank of America, ranked among the nation’s biggest home lenders. Last year, his New York-based firm’s wagers against the U.S. housing market helped earn an estimated $2.5 billion. Charlotte, North Carolina-based Bank of America represents Paulson’s biggest holding among financial companies, the letter said. A copy was obtained by Bloomberg News.
Bank of America dropped to $2.53 in February amid concern that the U.S. might seize banks that ran short on capital. While the bank “has risen from when we purchased the stock, we believe considerable upside remains,” the letter said.
Paulson, who manages about $29 billion, started a hedge fund last year called Paulson Recovery to invest in financial companies hurt by mortgage writedowns. His firm held 160 million shares of Bank of America at the end of the third quarter valued at $2.7 billion, according to regulatory filings.
Armel Leslie, a spokesman for New York-based Paulson, declined to comment on the holdings.Last Updated: November 17, 2009 17:45 EST