Bloomberg News

Paulson’s Main Fund Said to Lose 47% in 2011 Through September

October 08, 2011

Oct. 8 (Bloomberg) -- John Paulson, the billionaire who is betting on an economic recovery by the end of 2012, has lost 47 percent this year in his largest hedge fund, according to three people with knowledge of the matter.

Paulson’s Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies, uses leverage to amplify returns. The fund’s gold share class declined 32 percent this year through the end of September, said the people, who asked not to be identified because the fund is private.

Paulson, 55, would have to return about 89 percent in the remainder of the year to break even in the Advantage Plus Fund. Paulson & Co., which is based in New York and manages $30 billion, has lost money this year on investments including Citigroup Inc., Bank of America Corp. and Sino-Forest Corp.

Hedge funds slumped 3.2 percent in September, according to the Bloomberg hedge-fund aggregate index. It was their worst performance in more than a year, as global stocks tumbled amid a worsening European debt crisis and the threat of a U.S. recession.

Armel Leslie, a spokesman for Paulson, declined to comment on the returns.

Paulson investors can choose between dollar- and gold- denominated versions for most of the firm’s funds. About a third of Paulson’s assets are invested in gold shares, according to people familiar with the firm.

The Recovery Fund, which invests in assets Paulson believes will benefit from a long-term economic upturn, has fallen 31 percent this year, according to the people.

--Editors: Steven Crabill, Josh Friedman

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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