Sputtering Paulson Posts Further Losses

Dec 6 2011 | 1:05pm ET

Crawling towards the finish line of its worst year ever, Paulson & Co. is ending 2011 the same way it has spent almost all of it: losing money.

Following a turnaround that proved short-lived last month, New York-based Paulson returned to its losing ways in November. The firm's largest hedge fund, Advantage Plus, lost 3.6% on the month, leaving it down 46% on the year with just one month to go. Its flagship advantage fund, less levered than Advantage Plus, lost 3.3% last month to increase its 2011 loss to about 32%.

Firm founder John Paulson has already apologized for the poor performance which, barring the most improbably positive December in hedge fund history, will end his four-year streak of double- or triple-digit returns. Positive returns, that is.

Paulson's other funds aren't doing much, or any, better than its main funds. Paulson's admittedly premature Recovery Fund is down 28% on the year after losing another 4% last month and his merger arbitrage Paulson Partners Enhanced Fund is down 18% after dropping 0.6% in November. The firm's Credit Opportunities Fund is also down 18% on the year, having dropped 3.6% in November.

Investors in Paulson's Gold Fund and gold-denominated share classes are doing less poorly. The former rose 1.3% last month and is up 11% on the year. The latter are not doing so well, but they are doing much better than Paulson's dollar-denominated funds. Advantage Plus' gold share classes is down only 29% on the year, Advantage's 13%, Recovery's 12%, and Partners Enhanced 0.9%. The gold shares of Paulson's Credit Opportunities Fund are actually up 0.3% on the year.

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