Citigroup (NYSE: C) ended 2010 as the most popular stock holding of the "Smart Money 30," a group that includes the largest equity hedge funds, reports Reuters. And the surge in buying activity came at the expense of Goldman Sachs (NYSE: GS). Several funds boosted their Citi holdings while paring their Goldman exposure.

Some of this activity may be driven by valuations. Citigroup stock trades at about book value; Goldman Sachs stock trades at a multiple of about 1.3. Banks in general trade at multiples of 1.3 to 1.5.

Still, many are wary of Goldman in part because it seems to be most exposed to the Volcker Rule. The bank has indeed sold some of its prop trading units. Many wonder what will power the firm's growth in the near future.

Citigroup, on the other hand, isn't nearly as exposed to the foreclosure fiasco as other top consumer banks, notably Bank of America (NYSE: BAC). The bank has also recently freed itself from government control. For 2010, it reported its first annual profit since 2007.

My sense is this mindset will change quickly if the deal environment continues to heat up. The big looming driver for Goldman Sachs just might be mergers and acquisitions. It is well-positioned to capitalize on any boom, which seems to be in the making.

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