Paulson Advantage Plus Lost 52% In '11

Jan 9 2012 | 2:37pm ET

As is by now well-known, things didn't just go badly for Paulson & Co. last year, they went spectacularly badly. Now, we know just how spectacularly.

The New York-based hedge fund giant, which has enjoyed double- or triple-digit returns in each of the last four years, saw its largest fund, Advantage Plus, lose about 52% in 2011. A less-levered version of the fund, Paulson's flagship, Advantage, fell 36% during the year.

Indeed, all of Paulson's funds suffered double-digit declines last year. Its Recovery Fund was battered by the lack of a recovery, falling 28%, and its Credit Opportunities Fund, which put the firm on the map in 2007 when it more than doubled investors' money betting against subprime mortgages, lost 18%.

Even Paulson's best investment in 2011 turned against it as the year drew to a close, with gold dipping in the second half.

"Clearly, this has been an aberrational year for us," firm founder John Paulson wrote to clients. "Going forward, we remain committed to restoring all of our funds to profitability." Paulson also pledged to keep his own considerable fortune in his funds.

Paulson will have to return to his subprime mess form to make up for last year. Advantage Plus will need to return 104% before investors are made whole again—and before Paulson can begin charging incentive fees on it again. Last year's disaster wiped out three years worth of returns for Advantage Plus, leaving a client who first invested at the beginning of 2008 down 3.5% over the past four years.


In Depth

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Hedgies, Economists and Musicians Mingle At Milkin Mixers In Hamptons

Aug 25 2014 | 6:00am ET

Leave it to Michael Milken to bring some gravitas and sweat to the Hamptons -- along...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.