(Soros-Paulson-Citigroup poll story updated for Treasury sale, Friday trading)NEW YORK ( TheStreet) -- The past week began and ended with some pretty big financial players revealing details about their stakes in Citigroup ( C). To close the week on Friday, the Treasury Department said that the Troubled Asset Relief Program (TARP) was going to cost the U.S. taxpayer a lot less than previously forecast -- $11.4 billion less, according to a new estimate that the Treasury sent to Congress. U.S. taxpayers enraged by the TARP program blank check written to the banks had one bank, in particular, to thank for the reduced TARP price tag, Citigroup. The Treasury said on Friday that TARP repayments of $190 billion were higher than previously anticipated, and that its stake of 7.7 billion shares in Citigroup was the primary driver. The Treasury cited the March 31 Citigroup share price of $4.05 in its Friday announcement -- or 80 cents more per share than the price at which Treasury converted the megabank's preferred stock into common equity. On April 26, the Treasury said it was selling 20% of its 7.7 billion Citigroup shares. On the day previous to the Treasury sale announcement, Citi shares had closed at $4.86. Citigroup shares ended this Friday up more than 3% -- though less than some of its biggest bank competitors -- as the financial sector rallied after the Senate passed the financial reform bill, ending the regulatory uncertainty. The Treasury is not the only major Citigroup investor who has been busy trying to time its sale of the bank's shares as Citigroup rides the long road to recovery, either. On Monday, another round of 13F filings from the hedge fund heavyweights George Soros of Soros Fund Management and John Paulson of Paulson & Company revealed their quarterly portfolio decisions. The quarterly update to the public stocks that the hedge fund managers have been buying and selling always attracts a lot of attention, even though the information is backward-looking. Given the lag on the release of the portfolio information, the stock buys and sells of the hedge fund masters can be most interesting when they are at odds with each other on a particular big name stock, as it turns out, Soros and Paulson were over shares of Citigroup in the first quarter. In the fourth quarter 2009 quarterly holdings update from both hedge fund managers, released back in February, both
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At the end of the fourth quarter, Citi shares were at $3.31. By the end of the first quarter, Citigroup stock climbed to $4, and reached its highest price in the past year, at $4.31, just four days before the first quarter ended, on March 26. Soros, who built up his Citigroup stake within the fourth quarter, may have been able to pocket a tidy profit from Citi's climb back from the abyss. Yet, from the end of the first quarter at March-end, through the middle of April, Citi shares actually gained another $1, to a high over $5 right before the European debt crisis sent the markets into a tailspin. Should Soros have waited another month to book his short-term profits? Of course, hindsight is always 20-20, especially when it comes to monitoring the moves of the hedge fund managers who only ever give us hindsight as a window. Citi shares are now back under $4, the level at which many market watchers expect that Soros took his gains -- though the hedge fund manager does not discuss his quarterly portfolio moves. Paulson, meanwhile, continues to be a big believer in the banks, not just holding steady with his Citigroup stake, but increasing his stake in Bank of America ( BAC). Paulson is the largest shareholder in both Citigroup and Bank of America shares. Paulson has previously said he expects Bank of America shares to be near $30 by year-end, and while he hasn't called his shot in terms of where Citi shares are headed, it looks like he has more faith than Soros in Citi's ability to right itself from its recent stumble back below $4. Soros has a much smaller stake in Bank of America shares, but he did also defy the Paulson wisdom on Bank of America in the first quarter, bringing his hedge fund group's holding down from 338,000 shares to 217,000 shares. Paulson's bearish outlook on the banks was reserved for shares of regional bank Fifth Third Bancorp ( FITB), of which Paulson unloaded 500,000 shares. However, Paulson added a new position of 400,000 shares in First Midwest Bancorp ( FMBI), so replacing one regional bank with another doesn't really show a hedge fund manager drawing a bank line in the sand.
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The disagreement between Soros and Paulson on Citi shares wasn't the only major bank bet on which Paulson was showing more support for a major bank stock than other famed investors. The Berkshire Hathaway ( BRK.B) quarterly filing showed that Warren Buffett has sold all of his remaining 2.4 million share stake in SunTrust Banks ( STI). Paulson, on the other hand, didn't touch his stake of 30 million SunTrust shares. SunTrust shares fell sharply on Tuesday. Has the market decided Buffett made the better call on SunTrust than Paulson? Everyone knew coming into the first quarter holdings update that Buffett would again be a net seller of shares as he continued to finance his acquisition of Burlington Northern railroad. In the end, the biggest bank stock line in the sand in the first quarter was Citigroup shares. Indeed, Soros' big Citi sell while Paulson stood firm, raises the question, Which hedge fund heavy made the right call on Citigroup shares, Soros or Paulson? Take our poll below to see what TheStreet thinks.
-- Reported by Eric Rosenbaum in New York.
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