Paulson To Close Advantage Funds To New Money

May 11 2010 | 12:03pm ET

Paulson & Co. will close its largest hedge funds to new investments this summer, it told clients in a conference call yesterday.

The New York-based firm, which manages $35 billion, said it would restrict inflows into its Advantage funds, which manage about $20 billion. Paulson said it will only take in new money to replace redeemed investments, with further details to come in late June.

The moves comes amidst a fair amount of criticism of Paulson for not closing the funds to new investment as most blue-chip hedge funds do. To date, however, Paulson’s openness to new money hasn't hurt the Advantage Plus fund, it’s largest: The fund is up 6% through April, ahead of its peers if slightly trailing the broader markets.

Firm founder John Paulson rejected the criticism that his funds had grown “too big to succeed,” saying that their increased size has not hampered their ability to produce returns.

During the call, Paulson received only one question related to the Securities and Exchange Commission fraud lawsuit against Goldman Sachs, which stems from a collateralized debt obligation that the bank structured and marketed for the hedge fund. The question he did get was actually about redemption requests in the wake of the Goldman case, which the firm said were running below average. Paulson also said it expected any outflows to be offset by new money coming into its funds.

Paulson has not been accused of any wrongdoing in the Goldman case. The SEC alleges that the Wall Street giant misled investors about Paulson’s role in building the CDO and about the hedge fund’s plans to short the vehicle.

Most of the call dealt with Paulson’s economic outlook. The man who made his name betting against housing prices, earning triple-digit returns three years ago, now believes that home prices will bounce back.

“If you don't own a home today, now is the time to buy one,” Paulson said. He said home prices would rise between 3% and 5% this year and between 8% and 12% next year.

“I believe we have the basis for a strong economic recovery,” he said. “I think we will continue to grow in excess of the estimates.” The hedge fund honcho said his bet is on a V-shaped recovery, adding, “we are pretty excited by the opportunities in front of us.”

Paulson’s take on the U.S. housing market is more bullish than most, as is his position on the European debt crisis. He said that those sovereign debt issues were “manageable.”


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.