Hedge funds bet big on BofA

Reuters – At least 20 top hedge funds boosted their positions in financial institutions in the latest quarter in a sign that Wall Street is ready to bet on more risky sectors in the hope of longer-term rewards.

The push into financials indicates that fund managers including Steven Cohen and John Paulson, who are watched closely as barometers of risk, have shifted from routine merger arbitrage plays to directional bets that have more potential.

The aggressive switch was given credence by stress tests conducted by U.S. regulators that underscored the underlying health and viability of banks — if they could raise capital.

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