John Paulson Takes Giant Step Away From Recent Woes

January 08, 2013   Stephen Taub

John Paulson took a giant step last year toward recovering from his recent woes.

While many Paulsonophiles have been focusing on the continuing losses of the Advantage funds, the other three major funds managed by Paulson & Co. posted gains last year.

Credit Opportunity, which now accounts for the largest portion of Paulson assets, was up 9.1 percent in 2012. The gold share class rose 10.8 percent.

Recovery Fund was up 4.1 percent and the gold shares were up 7.5 percent.

The best performers were the merger arbitrage funds. Paulson Partners L.P. was up 9.9 percent while Paulson Enhanced—which has double the weighting due to leverage—surged 20 percent, the same as the gold class.

These three groups of funds—Credit, Recovery and merger portfolios—now account for more than 65 percent of the firm’s assets, which are down to $19 billion from a high of nearly $36 billion two years ago.

As for the losing funds, Advantage finished the year down 14 percent while Advantage Plus lost 19 percent.

Even so, the weighted average performance of all of the firm’s funds was a positive 1 percent.

The firm would not comment on these results.

Paulson, of course, became a hedge fund household name when his personal earnings topped $3.7 billion in 2007 after successfully betting against the housing market. He personally lost around $3 billion in 2011 when many of his funds lost between 20 percent and 50 percent.

Paulson continues to have a big bet on gold. In the third quarter, he raised his stake in an exchange-traded fund that tracks the price of gold to $3.7 billion. His third largest holding was gold producer Anglogold, of which he is the largest shareholder.

Last year, Paulson and his family Foundation announced they are donating $100 million to the Central Park Conservancy.

Follow Stephen Taub on Twitter @stephentaub

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