John Paulson's very bad first half was punctuated by a very bad June, indeed.
All of Paulson & Co.'s hedge funds lost ground last month, giving Paulson only six months to make up some sizeable losses—to say nothing of the sizeable losses he suffered last year and is seeking to recoup.
Paulson's flagship Advantage Fund lost 5.7% in June and is down 12% on the year—its gold share class lost 3% on the month and is down 8% on the year. And the more highly-levered Advantage Plus Fund, which lost more than half its value last year, dropped 7.9% in June and is down 16% on the year, with its gold share class down 6.6% in June and 14% on the year.
And even though Paulson's Gold Fund lost only 0.7% last month, it is still down 23% on the year, Bloomberg News reports.
Many of the losses can be traced to Paulson's bearishness on Europe—he continues to believe that the euro will collapse, despite European leaders' agreement to relax emergency loan terms for Spain.
"The plans announced at the end of June will prove insufficient in solving the structural problems of the euro zone," Paulson wrote to investors. "Like the passage of the Greek bailout plan in March, the plans' impact on the markets will prove temporary and short-lived. These plans do not solve the productivity gap among euro-zone countries, current account deficits, government deficits, unemployment and capital outflows."
But even Paulson's Recovery Fund, which predicts an economic turnaround in the U.S., was hit in June, losing 2.3%, though it is up 3.5% on the year. Paulson Partners Enhanced fell 4.9% on the month to cut its year-to-date gains by more than half, to 4.1%, and Paulson's Credit Opportunities Fund lost 2.8% in June and is up 2.2% on the year.