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Appaloosa's Tepper Buys Citigroup, Wells Fargo

NEW YORK ( TheStreet) -- David Tepper, who managed some of the best-performing hedge funds last year, boosted his Citigroup (C - Get Report) holdings and initiated a position in Wells Fargo (WFC - Get Report) during the fourth-quarter, when the banks' shares fell, according to a regulatory filing.

Tepper, who specializes in distressed debt, ranked in the top 1% of hedge fund managers in 2009. His four funds -- Appaloosa Investment, Palamino and Thoroughbred onshore and offshore -- rose at least 84% each.

Shares of Citigroup, Wells Fargo and Bank of America (BAC - Get Report) dropped during the fourth quarter as the banks sold shares to raise enough capital to repay government bailout funds. Compensation outrage and the announcement of the so-called Volcker Rule, a proposal to limit banks' proprietary trading operations, have continued to batter financial stocks this year.

Tepper increased his Citigroup stake by 73% to 138 million shares since he last reported holdings in November. He started a new position in Wells Fargo, buying 11 million shares. Citigroup shares plunged 32% during the fourth quarter, while Wells Fargo's sank 4.2%. The S&P 500 Financials Index lost 3.7% during that period, as the S&P 500 Index gained 5.5%.

Tepper reduced his Bank of America exposure by 4.7% to 32 million shares. However, Bank of America remains his top holding based on dollar value, followed by Citigroup.

Tepper's wagers on credit-card company Capital One (COF), online brokerage E*Trade (ETFC) and regional banks Fifth Third Bancorp (FITB) and SunTrust Banks (STI) were unchanged. He cut his position in BB&T (BBT).

He doubled his stake in commercial real estate financier Gramercy Capital (GKK) and added 1.4 million shares of the insurer Hartford Financial Services (HIG).
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