Updated to reflect analyst commentary and share prices
NEW YORK (TheStreet) -- Warren Buffett's buy and hold bank investing strategy has lost at least one follower: Hedge fund magnate John Paulson, who turned corporate raider in a proposed split of Hartford Financial Services (HIG).
For Buffett, recent buyback and dividend boost announcements by Wells Fargo (WFC), American Express (AXP), U.S. Bancorp (USB) and SunTrust (STI) have paid off again and again. But after liquidating stakes in Bank of America (BAC), Wells Fargo and Citigroup (C) ahead of a 2012 share surge, Paulson's activism on a large Hartford Financial Services holding reveals his impatience with the sector and his focus on getting returns fast.
|John Paulson's flagship hedge fund was reportedly down 51% in 2011|
For Paulson, 2011 was even more missable. His flagship Advantage fund dropped 51% in 2011, according to Bloomberg reports after a bet on financials panned. By comparison, Paulson's Advantage Plus fund jumped 164% in 2007 on a timely mortgage short. Timing may be a problem for Paulson in 2012 after he threw in the towel on his biggest bank holdings such as Bank of America, Citigroup, Wells Fargo, SunTrust and Regions Financial (RF) in the fourth quarter of 2011. Each of those banks have added to late 2011 gains with an over 25% year-to-date stock surge, on expectations for improving earnings, lower legal liabilities and buyback and dividend increases in the wake of the Federal Reserve's stress test results. Paulson's two largest holdings are tied to gold, however he also counts Delphi Automotive (DLPH), Hartford Financial, Anadarko Petroleum (APC) and Capital One Financial (COF) as his largest corporate holdings, according to filings with the Securities and Exchange Commission compiled by Bloomberg. Overall Hartford Financial is Paulson's fifth largest investment after paring his bank holdings. While Wednesday news signals that Paulson may start winning his Hartford Financial Services investment battle, the hedge fund investor immortalized in Michael Lewis's The Big Short for his subprime bet may be losing the investment war to Buffett's long-term investing math.
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