New York based Paulson & Co., regulator of the Paulson hedge fund, has revealed that it has acquired 300 million Citigroup shares, while also confirming that all its Goldman Sachs stake has been sold off. This is group's second billion dollar investment in a bank that was injected with various Government bailouts during the global recession, the first being Paulson's purchase of 168 million shares of Bank of America Corp. based in Charlotte, North Carolina.

Last year, John Paulson had earned nearly $2 Billion by betting on the fact that the housing market would crash, placing him second on the list of fund managers who earned the most in the past year. Now, as the financial market starts showing strong signs of recovery, the hedge fund manager is investing in bank stocks that collapsed last year.

"If you are guided by what happened to these companies, you would have to think Citigroup is the most problematical of the major banks”, warned Warren Marcus, who ran the bank Research Department at Salomon Brothers Inc. during the 1970s. “Maybe there is a perception that Citi over time has got a better upside than some of the others".

Citigroup is partly owned by the Government, and now Paulson holds a stake in it as well. It seems that the hedge fund regulator is optimistic about the economy recovering very soon, especially the banking sector.