Paulson's hedge-fund group having sold its entire Goldman Sachs Group Inc. stake, has proceeded to acquire $300-million worth of Citigroup Inc. shares.

The Citigroup holding is New York-based Paulson & Co.'s second billion- dollar plus investment in a bank that received government bailout funds during the credit crunch, the other being Charlotte, North Carolina-based Bank of America Corp. in which the Paulson group bought 168-million shares in the second quarter.

Last year, Paulson earned $2-billion by betting the housing market would collapse, investing in bank stocks that plunged during the 2008 financial crisis. During the third quarter, selling his shares in Goldman Sachs and JPMorgan Chase & Co., Paulson is building a stake in the partly self-owned partly government owned Citigroup bank.

Warren Marcus, head of Salomon Brothers Inc.'s Bank Research Department in the 1970s said Citigroup, the most problematical of major banks, perhaps, has a perception over time it will get a better upside than other banks.

Paulson & Co. with $29-billion under management invests in four strategies: merger arbitrage, event-driven trading, credit and financial services.

Largely staying with stocks during the quarter, Paulson stayed with his bet on gold.

Paulson & Co. also has stakes in Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM) and Capital One Financial Corp. (COF) keeping them for the second-straight quarter, even while it trimmed its Bank of America and JP Morgan stakes.

Originally a merger-arbitrage specialist, John Paulson became famous in 2007, scoring spectacular gains for betting against subprime mortgages. While, his hedge funds continue to invest in mergers, Paulson has expanded into other areas, since then.