Moore Capital Management LP and Maverick Capital Management LP bought Citigroup Inc. (C) shares as the bank’s board grew dissatisfied with CEO Vikram Pandit’s performance,By Dakin Campbell to Bloomberg
Moore Capital, the hedge fund run by billionaire Louis Moore Bacon, bought 5.31 million shares in the quarter ended Sept. 30, making the lender its biggest U.S. publicly listed holding, according to a U.S. Securities and Exchange Commission filing yesterday. Maverick, the $10 billion firm run by Lee Ainslie, purchased 2.72 million shares of the New York-based bank, according to a filing.
The filings show investors placed bets on Citigroup even as the board’s confidence in Pandit was waning. The firm said Oct. 16 that Michael Corbat replaced Pandit and will review the bank’s businesses before making more management changes.
“There are a lot of pieces to this puzzle that can create value if you have the right management,” said William B. Smith, CEO of hedge fund Smith Asset Management, which owns shares of the bank. “Citigroup is a bloated bureaucracy; radical things still need to get done.”
Citigroup advanced 1.5 percent to $35.55 at 10:34 a.m. in New York. The shares have fallen 3.2 percent since Pandit’s departure and plunged 89 percent during his five years as CEO. Shannon Bell, a Citigroup spokeswoman, declined to comment on the stock-ownership changes.
Corbat, 52, takes over a strategy of cutting jobs and disposing of unwanted assets, including a minority stake in Smith Barney. He’ll seek to return more capital to shareholders after the Federal Reserve blocked the bank’s proposal in March, and sustain a turnaround at a company that incurred almost $30 billion in losses during the depths of the financial crisis.
The board ousted Pandit after concluding his handling of operations caused setbacks with regulators and cost credibility with investors, a person with knowledge of the discussions said at the time of his departure. Directors had contemplated replacing Pandit for months as they became increasingly frustrated with his performance, the person said.
Citigroup posted third-quarter profit (C) of $468 million, or 15 cents a share, after analysts surveyed by Bloomberg predicted a loss. The stock surged 19 percent in the period, the best performance in the KBW Bank Index of 24 U.S. lenders.