Paulson said to pare bets on recovery as main funds decline

Billionaire hedge-fund manager John Paulson, whose $32 billion firm has been betting on an economic recovery by 2012, has pared bullish bets across his funds, according to a person briefed on the investments.
APR 16, 2010
Billionaire hedge-fund manager John Paulson, whose $32 billion firm has been betting on an economic recovery by 2012, has pared bullish bets across his funds, according to a person briefed on the investments. Paulson's $3 billion Recovery Fund, a bet on his view that the global economies will rebound quickly, reduced net investments in securities that are poised to gain in value with a recovery to 107 percent of assets from 140 percent, said the person, citing a letter Paulson's firm sent to clients. Paulson also cut bullish bets in his largest funds after they declined this year, the person said, asking not to be identified because the information is private. Stocks worldwide have dropped more than 7 percent since mid-April amid concern the economic recovery may stall. U.S. growth slowed to a 2.4 percent annual pace in the second quarter, from 3.7 percent in the previous three months, as a scarcity of jobs eroded consumer spending. Paulson, 54, said he believes the global recovery remains intact, and that over the next two years, he expects to make money in the stocks of companies going through bankruptcies, restructurings and reorganizations, according to the person. Armel Leslie, a spokesman for Paulson's firm, declined to comment. Main Funds Decline Contents of the letter were previously reported by the Financial Times. Paulson's Advantage Fund, which invests in corporate events such as bankruptcies and mergers, was up about 1 percent in July and is down 4.8 percent for the year, according to the person. A leveraged version of that fund has tumbled 7.2 percent year to date. Together, the two funds account for almost two-thirds of assets. Paulson reduced the so-called net long exposure on his Advantage funds to 67 percent from 72 percent, and dropped it to 50 percent from 58 percent on his merger fund, the person said. Net exposure is calculated by taking bullish bets, including borrowed money, and subtracting bearish wagers. The Recovery Fund jumped 6.5 percent in July and is up 9 percent for the year, the person said. Paulson's Gold Fund, which he started at the beginning of the year, fell 5.9 percent in the month and is up 5.7 percent through July. Gold fell 5.3 percent in the month.

Latest News

Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale
Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale

RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.

Beyond wealth management: Why the future of advice is becoming more human
Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up
Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up

Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.

UBS loses $1.2 million arbitration claim linked to variable annuities and margin
UBS loses $1.2 million arbitration claim linked to variable annuities and margin

UBS has a history of costly litigation stemming from the sale of volatile investment products.

'We are monitoring the situation,' SEC says of private funds
'We are monitoring the situation,' SEC says of private funds

New director David Woodcock puts firms on notice over fees, conflicts, and liquidity risk as private credit shows signs of stress.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline