Most of billionaire John Paulson’s hedge funds rose in May as stocks climbed to records and bets on mergers and credit paid off, according to a person briefed on the returns.
The Paulson Partners Enhanced fund, a merger-arbitrage strategy that uses leverage to amplify gains, rose 1.9 percent last month and 4.8 percent year to date, said the person, who asked not to be identified because the information is private. The Credit Opportunities fund gained 1 percent in May and is up 7.4 percent this year.
The New York-based firm, which shot to fame after successfully betting against the U.S. housing market before the crash, oversees $21.4 billion. Paulson & Co., which suffered losses in 2011 and 2012, is extending last year’s rebound in most of its funds. The Standard & Poor’s 500 Index (SPX) rallied last month from an April 11 low, recovering all of its declines after a selloff in technology and small-cap stocks that overshadowed optimism about the strength of the economy.
Armel Leslie, a spokesman for Paulson & Co. with WalekPeppercomm, declined to comment on the returns.
Paulson’s firm posted losses in its event-driven funds last month, the only one of its main strategies to post declines, as positions in gold miners slumped, the person said. The Paulson Advantage Plus fund, which employs leverage, dropped 3.7 percent in May and is down 2 percent this year.
Its unlevered event-driven Advantage fund fell 2.3 percent last month and 3.4 percent in 2014. Gold stocks decreased 8.7 percent and the metal declined 3.9 percent in May as stocks rose and geopolitical tension between Ukraine and Russia eased.
Paulson’s Recovery fund climbed 1.8 percent last month and 2.8 percent this year as positions in banking, hotels and telecommunications contributed to gains, the person said.
The firm’s Paulson Partners fund, a similar strategy to the levered merger pool, rose 0.9 percent in May and 3.3 percent this year, helped by gains in telecommunications, health care, energy and post-reorganization equities, the person said.
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