In a year filled with red-soaked months, September may have been the worst for Paulson & Co.
The New York-based hedge fund suffered big losses in all of its hedge funds last month—including those that had, until now, bucked the trend and performed well. The firm's largest fund, Advantage Plus, fell almost 20% last month and is now down 47% on the year. Advantage will need to return 90% in the fourth quarter simply to break even.
The less-levered version of that fund, Advantage, lost 12% last month and is now down 32% with just three months left to the year.
Worse still for firm founder John Paulson is that his gold bets, the savior this year of both his own fortune and something of his reputation, took a big hit last month. The precious metal lost 11% last month—but Paulson's gold-only fund fell 16.4%, cutting its year-to-date gains to just 1%. Gold itself remains up 16% on the year.
The $30 billion firm's Recovery Fund is also in dire straits, losing more than 14% in September and 31% year-to-date.
Paulson has scheduled a conference call with investors for tomorrow. The firm, which has been buffeted each month with bad publicity, had sought to tamp down on that; where the firm formerly notified all investors about the performance of all of its funds, it now only offers updates on funds that each client is actually invested in.
Despite the huge—and growing—losses, Paulson, which has posted double- and triple-digit returns in each of the last four years, has apparently not lost the faith of its clients. Redemptions for September were actually down from last year. The firm's next redemption date is at the end of this month.