Paulson Defends Decision To Invest In Sino-Forest, Says Firm Lost $574M

Jun 27 2011 | 1:29pm ET

John Paulson has offered a defense of his hedge fund's disastrous investment in a Chinese timber company, while admitting that it cost his investors more than US$500 million.

The Paulson & Co. founder told investors that losses from its Sino-Forest Corp. investment totaled some C$562 million (US$574 million). The hedge fund, which dumped its stake—once 12.5%—in the company last week, suffered net realized losses of C$105 million over the life of its investment.

Sino-Forest shares, listed in Toronto, plummeted earlier this month when hedge fund Muddy Waters accused the company of overstating its timberland holdings in China's Yunnan Province. Shares took a further hit last week when the Globe & Mail newspaper backed up some of Muddy Waters' claims.

Sino-Forest has denied the allegations, but its shares have dropped by some 90% since the Muddy Waters accusations emerged.

Despite the huge losses, Paulson did not offer contrition for the investment, noting that the hedge fund "conducted considerable due diligence" before pouring millions into Sino-Forest. He said a member of the firm visited China to inspect the company's operations and intensively researched the company before investing in 2007. Paulson also lauded Sino-Forest's "outstanding financial results" and noted that it "consistently traded at a significant discount to its global forest company peers."


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

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.