Tepper Pulls Plug On BofA, Will Paulson Follow Suit?

By Todd Shriber

When it comes to Bank of America, bad news seems to come in bunches. Not only did the shares have to contend with news of $10 billion counterparty lawsuit announced by American International Group (AIG) earlier this week, but the largest U.S. bank by assets saw one of its most ardent supports finally throw in the towel on the downtrodden stock.

On the same day that saw the retreat to levels not seen since the height of the financial crisis,  CNBC reported David Tepper’s $15 billion hedge fund, Appaloosa, has dumped all 17 million of the BofA shares it previously held during the second quarter.

According to this SEC filing, Appaloosa held just over 17.2 million BofA shares as of May 16 and nearly 3.1 million shares of Wells Fargo. The firm’s stake in Wells Fargo (WFC) has also reportedly been liquidated, CNBC noted. The hedge fund also held nearly 77 million shares of Citigroup (C) and it is believed that position has been trimmed as well.

Make no mistake about it: This is a blow to BofA bulls, assuming there are any left. Tepper was once one of the Dow component’s most vigilant supporters, saying back in May 2010 that the stock could shoot to $27 within a year.

Obviously, that move never materialized and BofA turned into a real turkey for Tepper. He’s not alone. Fellow hedge fund luminary John Paulson was knee-deep in the stock at the end of the first quarter as well. At one point, it looked liked misery loved company. Now the big question ahead of filing seasons is did Paulson trim or eliminate his BofA stake as well?

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