John Paulson gained fame for his big bet on a real estate crash--to the tune of $3 billion in 2007. Now he seems to be betting on a financial recovery. TheStreet.com reports that as of June 30, Paulson held $3.5 billion worth of long positions on banks, some of which suffered mightily in the credit crunch--banks such as Bank of America, JPMorgan Chase, Goldman Sachs, Capital One, Regions Financial, People's United, First Horizon, Fifth Third, Sun Trust and State Street.

Apparently, Paulson has also bought a 2 percent stake in Citigroup. Lots of hedge funds are long stocks, and no one would be surprised if they were the ones bidding banks higher, but the bet is hardly a sure shot. Lots of "value investors" betting on a rebound have been burned so far. 

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