Billionaire John Paulson, the hedge-fund manager trying to recover from losses related to bullion this year, told investors he will stop regularly reporting his Gold Fund and gold share class returns, according to a person familiar with the matter.
Investors in the Gold Fund and the gold share classes will now receive updates on performance separate from the firm’s usual monthly reports, Paulson & Co., which manages $19 billion, said yesterday in a letter to investors, according to a person who has seen the letter. That’s because scrutiny given to investments tied to the metal has taken attention away from positive performance in other strategies, said the person, who asked not to be identified because the information is private.
The Gold Fund, the firm’s smallest strategy and comprised mostly of Paulson’s own money, has fallen 47 percent this year through April. Gold dropped 5.4 percent in May and 17 percent this year amid concern that the U.S. Federal Reserve may slow the pace of stimulus and as some investors lost faith in the metal as a store of value. Paulson has said the metal is the best protection against currency debasement and inflation.
Investors can choose between gold- and dollar-denominated versions of most of Paulson & Co.’s funds. The gold share classes are owned primarily by Paulson himself and employees.
Armel Leslie, a spokesman for New York-based Paulson & Co. with Walek & Associates, declined to comment on the letter.
The firm’s Credit Opportunities Fund, the largest strategy at $5.6 billion, rose 3.5 percent last month and 16 percent this year, said the person. The strategy has regained its high-water mark, or previous peak value, the person said. Managers whose funds fall below the mark aren’t able to charge performance fees until they recoup losses. The merger strategy is the only other above its high-water mark.
The Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and has a portion invested in gold miners, rose 3 percent in May and 7 percent this year. A version of the Advantage Fund that uses no leverage gained 2.3 percent last month and 4.9 percent in 2013, according to the person. The strategy has $4.3 billion in assets.
The Recovery Fund, which makes bets on investments designed to benefit from a long-term economic advance and is Paulson’s best-performing strategy this year, rose 5.4 percent in May and 28 percent in 2013, the person said. The fund’s investments include insurance and asset-management companies. The strategy has $1.9 billion in assets.
Paulson Partners, a merger-arbitrage fund, climbed 0.9 percent last month and 8.5 percent this year, the person said. The merger strategy has $5.5 billion.
Paulson, 57, who made $15 billion for his investors in 2007 by betting against subprime mortgages before the housing collapse, is seeking to rebound from wrong-way bets in some of his strategies on a U.S. economic pickup in 2011 and a worsening European debt crisis, bullion and gold stocks in 2012.
The contents of the firm’s letter was reported earlier today by the Wall Street Journal.
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