Billionaire hedge fund manager Edward S. Lampert, who has a reputation for investing in beaten-down stocks, disclosed Tuesday that his firm has bought more than 15 million shares of Citigroup Inc.
Regulatory filings on Tuesday by RBS Partners LP, which manages Lampert's ESL Investments Inc., show that the fund started accumulating Citigroup shares last year, and owned nearly 10.87 million shares by Sept. 30. In the first quarter of 2007, Lampert enlarged his stake to about 15.24 million Citigroup shares. Based on Citigroup's current stock price, the position is now worth more than $800 million.
Citigroup is one of a small handful of stocks held by Lampert's high-profile ESL fund. It is majority owner of Sears Holdings Corp. and holds big stakes in AutoZone Inc. and AutoNation Inc., with Lampert having held seats on each company's board of directors. On Tuesday, Lampert also disclosed buying small stakes in Motorola Inc. and Clear Channel Communications Inc.
Lampert's Citigroup investment amounts to 0.3 percent of the outstanding stock of the world's largest financial-services company. The stake means Lampert ranks toward the bottom of Citigroup's top 50 institutional shareholders, according to data from FactSet Research.
But the disclosure comes as Citigroup Chief Executive Charles Prince tries to fend off pressure from shareholders who are demanding that he jump-start the giant company's stock price and financial performance. In recent years, the New York company has been weighed down by rapidly rising expenses and sluggish revenue in some of its business lines. Last year, Prince Alwaleed bin Talal, Citigroup's largest individual shareholder, called on Prince to take "draconian" steps to slash expenses. Since then, Prince has scaled back the company's expansion plans and last month unveiled a dramatic restructuring initiative that will cut about 17,000 jobs.
Lampert's intentions with the Citigroup stock aren't clear from the Securities and Exchange Commission filing, which didn't indicate any plans for Lampert to push for dramatic changes. Lampert, who is chairman of Sears, has a reputation as a value-oriented investor who jumps into struggling companies and works internally with company executives to turn things around. The two other companies where he disclosed stakes Tuesday, Motorola and Clear Channel, have both recently faced fights led by disgruntled shareholders.
But Lampert's stake is likely to be welcomed by investors who are frustrated with Citigroup's recent performance. William B. Smith, a Prince critic who runs Smith Asset Management Inc. in New York, said Lampert's decision to buy a sizable chunk of Citigroup stock may be a sign that Lampert "wants to shake things up" at the company.
A Citigroup spokeswoman declined to comment.
Tuesday's filings didn't say exactly when Lampert acquired the latest batch of about 4.37 million Citigroup shares, and it wasn't clear if the size of Lampert's stake has changed since March 31. In previous public filings last year, Lampert didn't disclose the Citigroup stake. The Securities and Exchange Commission sometimes permits investors to not publicly report stakes in companies for competitive or other reasons.
After skyrocketing late last year, Citi's stock has had a weak 2007. Its shares are down about 5 percent this year, but are up about 3 percent so far in the second quarter.