WRAPUP 1-Prominent hedge funds jumping into financials

* Hedge fund investors raise bets on financial sector

* CIT gets vote of confidence for bankruptcy turnaround

* Paulson buying big and small banks

BOSTON, Feb 16 (Reuters) - Prominent hedge fund managers voted with their wallets in the fourth quarter to declare the long financial crisis over, and made big bets on banks and other lenders to back that view.

John Paulson, Edward Lampert and Carl Icahn were among those who raised their bets on financial stocks during the last three months of 2009, regulatory filings released on Tuesday and last week show.

Large investors are required to report holdings of U.S.-listed equities at the end of each quarter, but not short positions or holdings of other securities like bonds and over-the-counter derivatives contracts. Investors are also allowed to file some holdings on confidential reports if they are trading into or out of a position at the end of a quarter.

The reports, issued by the U.S. Securities and Exchange Commission, are studied by investors for tips on how some of the savviest minds see the investment horizon.

CIT Group Inc CIT.N, a provider of loans to small businesses and middle market companies, received a vote of confidence from several hedge fund managers for its emergence from bankruptcy in December.

Lampert’s RBS Partners LP reported a holding of 4.5 million shares in CIT as of Dec. 31, and Paulson held 4.4 million shares at the end of the quarter.

CIT appointed John Thain, who helped engineer Merrill Lynch’s sale to Bank of America and then lost his job, as its new chief executive last week.

Paulson, the fund manager who made billions betting against the U.S. housing industry shortly before its collapse, now counts Citigroup C.N and Bank of America BAC.N among his largest holdings.

In the fourth quarter alone Paulson bought more than 200 million shares in Citi, raising his stake to $1.67 billion from $954 million, or about 8 percent of the fund’s total value.

Large stakes in Citi and Bank of America account for about 11 percent of almost $20 billion Paulson reported.

In the quarter, Paulson's New York-based firm made fresh bets or raised existing ones on a number of financial firms, from JPMorgan Chase JPM.N to Marshall & Isley, headquartered in Milwaukee.

Edward Lampert, long considered a savvy investor, has been a long-time holder of Citigroup. In the fourth quarter he significantly raised his stake in the bank to 31.3 million shares from the 18.8 million owned at the end of the third quarter.

Lampert's Greenwich, Connecticut-based fund firm also placed new bets on Bank of America by buying 453,512 shares. He bought 1.5 million shares of Wells Fargo & Co WFC.N during the fourth quarter as well.

Billionaire hedge fund manager George Soros also bought almost 95 million shares of Citigroup during the quarter, worth $313 million at year-end. Soros had reported no holdings in the troubled bank at the end of Q3. (Additional reporting by Aaron Pressman)