Paulson Starts '12 Strong

Feb 6 2012 | 3:05pm ET

Paulson & Co. began its long climb back from a catastrophic 2011 in January, with its main funds posting gains.

The $24 billion firm's Advantage Plus Fund returned 5% last month. That fund, Paulson's largest, plummeted 52% last year. Its flagship Advantage Fund, which uses less leverage than Advantage Plus, rose 4% on the month, after dropping 36% in 2011.

By contrast, the average hedge fund returned about 1.5% in January, according to industry indices, while the Standard & Poor's 500 Index rose more than 4%.

Investors who, like firm founder John Paulson, continue to believe in gold despite its precipitous decline over the last four months of last year, were handsomely rewarded in January. Paulson's Gold Fund rose 13%, and the gold share classes of its other funds all strongly outperformed their dollar-denominated shares. Advantage Plus' gold shares rose 7.4% and Advantage's 9.5%. Paulson's Recovery Fund returned 3.2% last month, while its gold shares rose 9.8%. Paulson Partners Enhanced dollar shares were up 4.1%, but its gold shares added 10%, and the firm's Credit Opportunities Fund managed a 3.5% dollar return and 8.9% gold return.

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