John Paulson, who amassed a fortune by betting against U.S. mortgage markets, became the biggest stakeholder in SunTrust Banks Inc. while fellow billionaire Warren Buffett was cutting his stake in the Atlanta lender.
Paulson & Co., a hedge fund based in New York, boosted its ownership to 6.1% of SunTrust's shares, federal filings showed this week. That gives his firm about 30.4 million SunTrust shares as of Dec. 31, an increase from 1.5 million on Sept. 30. Buffett's Berkshire Hathaway Inc. reduced its SunTrust holdings by 22%, to 2.4 million shares.
After making billions by foreseeing the collapse of the U.S. mortgage market in 2007 and 2008, Paulson placed bets last year on some of the banks hit hardest by slumping home prices, including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. SunTrust posted a $1.56 billion loss for 2009 as loans soured in the Southeast.
He also slashed holdings of Regions Financial Corp., a SunTrust rival.
Paulson's purchases are probably more significant than Berkshire's sales "because of his more narrow focus on financial stocks," said Terrence McEvoy, a banking analyst at Oppenheimer & Co. in Portland, Maine. "Buffett is a phenomenal investor, obviously, but he invests in many different sectors."
As for Wells Fargo, Paulson bought 17.5 million shares of the San Francisco company, according to the filing. That's not enough to dethrone Buffett as the biggest investor; he added more than 6 million shares to Berkshire's stake during the quarter and now owns about 320 million, or more than 6%.
