Friday, 25 July 2014
Last updated 3 hours ago
Aug 5 2010 | 7:13pm ET
A chastened—and less bullish—Paulson & Co. reaped gains in most of it hedge funds, reversing its second-quarter slide along with the rest of the industry. But the New York-based hedge fund giant did so by scaling back the exuberantly bullish bets it had made on a quick economic recovery.
Paulson decreased net exposure across its hedge fund lineup. Its Recovery Fund, launched in late 2008, cut its market exposure to 107% from 140%. The firm’s other funds made slightly more muted adjustments in the same direction.
The less bullish outlook came as the broader markets soared in July, with the Standard & Poor’s 500 Index returning more than 7% on the month. None of Paulson’s funds did as well last month. The Recovery fund led the way with a 6.51% return; it is now up 9.11% on the year.
Paulson’s flagship Advantage fund returned 1.1% on the month—in line with other hedge funds—leaving it with a 4.79% year-to-date loss. The levered version of the fund, Advantage Plus, remains down 7.2% on the year. The Credit Opportunities fund rose 0.97% on the month and is up 6.49% on the year.
By contrast, Paulson’s gold fund, which had been its best performer this year, gave back more than half of those gains last month, shedding 5.93%. It remains up 5.7% on the year.
“A consequence of our portfolio positioning is higher short-term market correlation and volatility,” John Paulson told investors in a 40-page letter.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…