Soros Matches Paulson's Bet on Citi

NEW YORK (TheStreet) -- It has not been a market secret that famed hedge fund managers George Soros and John Paulson both have treasure chests of gold that would make pirate legend Yellowbeard jealous, but until yesterday, the market didn't know how much both hedge fund managers like Citigroup(C).

Citi has been anything but gold in the past few years, though the bank has been on the comeback trail, and the news late on Tuesday that both Soros and Paulson had been buying up shares of Citi in the fourth quarter 2009 sent shares of Citi trading higher by more than 2% on Wednesday during the pre-market session - a gain of 7 cents to $3.38. Citi shares had been below $1 in March 2009.

Soros bought 95 million shares of Citigroup during the fourth quarter, according to a quarterly filing on Tuesday. Soros' Citi buying spree equaled $313 million worth of Citi shares at year's end. It was a big move into Citi, as Soros had previously reported no exposure to Citigroup in quarterly filings.

Soros' bullish turn on Citi echoed the trading strategy of his hedge fund peer John Paulson, who has been a big backer of a banking sector recovery in general, and Bank of America(BAC) and Citigroup specifically. While Paulson sold a few million of the 159 million Bank of America shares he owns in the fourth quarter, Paulson bulked up on Citi shares, buying an additional 200 million shares to take his overall stake in Citi to above 500 million shares.

Soros' bullish turn on Citigroup did not mean the hedge fund manager was relying any less on the importance of gold as a portfolio hedge, however. In fact, Soros almost tripled his gold holding, with 6.2 million shares of the SPDR Gold Trust owned at the end of 2009, up from 2.5 million shares of the gold exchange-traded fund held by Soros at the end of the third quarter.