Paulson Advantage Plus Down 31%

Aug 10 2011 | 5:11pm ET

Paulson & Co.'s hedge funds are looking like blocks of ice in the August sun, melting more and more with each passing day.

The New York-based firm's largest hedge fund is down an incredible 31% this year after losing 11% during the first week of August. Advantage Plus had been down 22% through the end of July. The $35 billion firm's flagship Advantage fund is now down 21.5%, after losing 15% through the end of last month.

With those losses, Paulson will have to return about 45% over the last four-and-a-half months of the year to break even on Advantage Plus.

Things appear to have gotten worse this week, as financial stocks have taken a serious beating. Bank of America and Citigroup are among Paulson's largest holdings, and the figures do not include the market routs on Monday or today.

Despite the unfolding disaster, investors have filed withdrawal notices for only $430 million from the Advantage funds, which manage a total of $15.5 billion. That's less than the average quarterly redemption.

And firm founder John Paulson is doing a good deal better than those numbers would indicate. Paulson has most of his money in his firm's gold shares, which have greatly outperformed his dollar shares. And Paulson's gold fund is actually up 6% this year. Gold itself is up 23% this year.

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