John Paulson (John Paulson news) seems to be doubling down on banks and financial institutions. A recent filing revealed he bought 1.1 million Goldman Sachs shares over the past three months. He also bought 30 million Bank of America warrants, boosted his holdings in Wells Fargo by 4.5 million shares and raised his holdings in Hartford Financial Services by more than 31 million shares, according to Dow Jones. (He cut his stake in CIT Group, however, to 3.3 million shares from 4.3 million shares.)

He's been bullish on the financial sector since last year, when he reversed his long bearish and quite successful bet. The Goldman move is interesting given his role in the ABACUS fiasco for which the firm just settled with the SEC.

Paulson is not the only one betting on Goldman Sachs. The Bill Gates Foundation just bought up 500,000 shares of the bank. As the uncertainty represented by the reform legislation starts to pass--though some big issues still remain--the picture is clear enough to believe the firm was slightly undervalued. That said, there are plenty of wildcards that just might restrain the multiple even more than the historical average.

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