Paulson Scores Big Profit on Citigroup (NYSE: C)

John Paulson, the hedge fund manager famously embroiled in the “Fabulous Fab” trading issue at Goldman Sachs (NYSE: GS) has apparently done quite well since mid-2009, reportedly earning $1 billion on his investment in Citigroup (NYSE: C).

According to a note sent to clients this month, Citi was his fund’s most profitable holding in 2010. Paulson’s hedge fund held 424 million Citi shares as of Sept. 30, according to regulatory filings. When it initially invested in Citi, investor confidence and market conditions were even lower than they are now, pushing the stock price to around $3. Now, with the rebound in the market and the firm’s earning’s, the stock but has been trading closer to $5 in recent months.

Paulson commented in the letter “Citigroup demonstrates the upside potential of many of the restructuring investments we have added to our portfolio and our ability to generate above-average returns in large positions.” Paulson has had a successful investing career, but particularly in the financial services sector. His bet against the housing market earned the firm tremendous profits in 2008 and, since then, its purchases of financial stocks on the cheap have produced bounties as well.

Paulson also holds equity in JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC), among others.