Citigroup Share Drop May Have Stung Some Backers

Citigroup's stock dive Wednesday likely hurt some prominent investors, such as American Funds and AllianceBernstein, that bought more of the stock in the last quarter.

These and some other big shareholders raised their holdings of Citigroup and other diversified banks in the quarter ended September amid the deepening financial crisis.

American Funds, a unit of Capital Group Cos, bought 26 million shares of Citigroup in the quarter that ended in September. It is now the biggest institutional shareholder of Citigroup and owned 426 million shares, or 7.8 percent, of the banking firm as of Sept. 30, according to Reuters data.

AllianceBernstein Holding raised its holdings of Citigroup by 20 percent, or 22.7 million shares, in the latest quarter and owned 135.6 million shares, or 2.5 percent, as of Sept. 30.

American Funds and AllianceBernstein declined to comment on their portfolio holdings.

Citigroup shares tumbled 23 percent to a 13-year low Wednesday as investors questioned the survival prospects of the the second-largest U.S. bank by assets.

The shares closed down $1.96 at $6.40 on the New York Stock Exchange and have fallen 33 percent this week as some investors concluded plans to shed 52,000 jobs and cut expenses by one- fifth will not restore the bank to health.

T. Rowe Price Group was another large backer of Citigroup, raising its holdings of the bank 40 percent, or 15.5 million shares, in the quarter that ended in September. T. Rowe's total holdings of Citigroup shares stood at 54.5 million, or 1 percent, as of Sept. 30.

T. Rowe spokesman Edward Giltenan said the firm had "significantly reduced" its holdings of Citigroup in the current quarter, but declined to give details.

Prominent fund manager Kenneth Heebner's Capital Growth Management is a new investor in Citigroup, buying 27.2 million shares, or a 0.5 stake, in the quarter that ended in September. Heebner was not immediately available to comment.

Other bank shares also declined Wednesday, including 11.4 percent at JPMorgan Chase , 10.3 percent at Wells Fargo and 14 percent at Bank of America , the largest banks by market value. Those declines likely hurt investors bullish on these banks.

Funds at Fidelity Investments made net purchases of 60 million shares of Wells Fargo, 49 million of JPMorgan shares and 45 million shares of Bank of America in the third quarter. And American Funds bought a net 81 million shares of JPMorgan in the quarter.

Fidelity declined to comment on its holdings.

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