Paulson Funds Cut Losses In October

Nov 4 2011 | 11:39am ET

Paulson & Co. rode last month's stock-market rally to pare its huge 2011 losses, the worst its ever seen.

The $30 billion New York-based firm's flagship Advantage Fund rose 4.7% last month—one in which the Standard & Poor's 500 Index advanced 11%—to cut its year-to-date loss to 29%. A larger, more levered version of the fund, Advantage Plus, returned 2.4% on the month and is down 44% on the year, Bloomberg News reports.

The gold-denominated versions of both funds did better in October, with Advantage rising 8.3% (down 12% YTD) and Advantage Plus 3.3% (down 27% YTD).

Indeed, all of Paulson's fund's posted positive returns in October, just a month after its miserable September, its worst month in a year filled with bad ones.

Paulson's hard-hit Recovery Fund, which has been betting on firm founder John Paulson's belief that the elusive economic turnaround is just around the corner, soared 10% last month to reduce its year-to-date loss to 25%. The gold version of the fund rose 13% (down 11% YTD).

Paulson Partners Enhanced jumped 3.3%—the gold shares rose 7.3%—leaving it down 17% on the year. But the gold version is down just 1.6%, the third-best of any Paulson fund behind his dedicated Gold Fund, which is up 9.4% on the year after rising 8.3% last month.

Paulson's Credit Opportunities Fund returned 4.9% in October and is down 15% year-to-date. The gold version rose 7.5% on the month and is up 2% on the year.

Despite the overall awful year suffered by Paulson, investors in the Advantage funds filed redemption requests totaling less than 8% of assets at the end of last month, the deadline for year-end withdrawal requests.

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