Famed hedge fund manager Edward Lampert, 44, has taken an $800 million stake in Citigroup — amounting to less than 1 percent of the bank’s shares — and furthering speculation that Citi could face activist demands to break up the company. CEO Chuck Prince has been under pressure to boost the share price, which has been treading water compared with those of its peers. Citi returned 13 percent over the year to June 4, compared with a 25 percent return for JPMorgan. Such lackluster results, combined with the ongoing takeover battle for ABN Amro, have fueled speculation that activists may take aim at Citi. Lampert’s intentions are unclear. “Lampert bought the stock because it’s undervalued,” says Ganesh Rathnam, a Morningstar analyst who follows Citigroup. “With an $800 million investment, he has less influence than many board members.” Lampert, of Greenwich, Connecticut–based ESL Investments, is also chairman of Sears, in which he owns a 45 percent stake.
