Caxton, Odey Among BofA Buyers Before Stress-Test BlunderDakin Campbell
Caxton Associates LP and Crispin Odey’s hedge fund were among buyers of Bank of America Corp. shares in the first quarter before the lender halted its capital plan and sparked a 15 percent stock plunge.
Caxton, the hedge fund founded in 1983 by Bruce Kovner, bought 2.5 million shares of the Charlotte, North Carolina-based bank in the first quarter, according to a filing yesterday. Odey Asset Management Group Ltd. purchased 5.3 million shares. George Soros was among investors selling the stock.
Bank of America has declined 15 percent since ending the first quarter at $17.20 in New York. It postponed plans last month to raise the dividend, after finding an error in files sent to the Federal Reserve for the annual stress tests.
“BofA was seen as the potential winner” coming out of this year’s stress tests, Joseph Morford, an RBC Capital Markets analyst based in San Francisco, said in a phone interview. “This has been somewhat of a disappointment. The company was starting to get some momentum.”
Bank of America and Citigroup Inc., which fell 7.3 percent since regulators rejected its request to give more capital to shareholders for the second time in three years, must resubmit capital plans. Among large banks, they trade at the lowest prices compared to book value. They both pay a token dividend.
Caxton’s holding in Bank of America rose to about 3 million shares, valued at almost $51 million at the end of March, according to filings. Odey held 11.5 million shares valued at $197 million. Sirios Capital Management LP, the Boston-based hedge fund co-founded by former MFS Investment Management portfolio manager John Brennan, bought 6.2 million shares.
Highfields Capital Management LP, the Boston-based fund run by Jonathon Jacobson, bought 2.8 million shares of Citigroup, ending the quarter with 3.1 million shares valued at $147 million. Dinakar Singh’s TPG-Axon Management LP initiated an investment in the New York-based bank, buying 1.9 million shares valued at almost $91 million at the end of March, according to filings.
Spokesmen for the funds buying shares either declined to comment or didn’t return e-mails seeking comment.
Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
Bank of America fell 2 percent to $14.55 yesterday in New York trading, while Citigroup dropped 1.3 percent to $46.52. The shares have fallen 6.6 percent and 11 percent this year, respectively, compared with the 3.3 percent decline for the 24-company KBW Bank Index.
Other investors may have avoided the decline. George Soros’s Soros Fund Management LLC exited an investment in Bank of America, selling 2.5 million shares. Soros also sold all 2.3 million shares he owned in Citigroup.
Viking Global Investors LP, the hedge fund run by O. Andreas Halvorsen, exited its investment in Citigroup, selling 4.1 million shares. Viking also unloaded 25.6 million shares of Bank of America, leaving it with 8.8 million shares.
Bank of America Chief Executive Officer Brian T. Moynihan, 54, had said that the bank would increase its dividend and buybacks this year. On March 26, the company said the Fed approved a quarterly dividend increase to $0.05 a share and $4 billion in share repurchases.
A month later, those plans were put on hold after the lender found botched accounting on structured notes issued by Merrill Lynch. At the company’s annual meeting earlier this month, Moynihan said the gaffe has meant “tough consequences” for investors.