There seems to be a classic bulls versus bears war going on over Citigroup (C). In one corner, the bears, who have made the bank, along with Bank of America (BAC), one of the most heavily shorted stocks on the NYSE. In the other corner is a star-studded group of investors, the likes of hedge fund (hedge fund news) stars George Soros, John Paulson, David Tepper and Eric Mindich, and the mutual fund manager of the year Bruce Berkowitz of Fairholme Capital.

More than 120 hedge funds have bought stock in the bank, according to Bloomberg. We may get a large bump due to some short covering soon. So what's going on? One trader suggests the big draw is implicit taxpayer support and very low short-term rates. Citigroup "can make money in their sleep by borrowing from the Fed at nearly zero and charging the American people any figure over and above 0.25% for their borrowings. (Rob from the many to give to the few, reverse Robin Hood style.)" The problem is that rates are likely to rise, which is going to get tricky for many banks.   

For more:
- here's the Bloomberg article

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