Paulson Credit Funds Up Triple-Digits On Subprime Bets

Sep 10 2007 | 11:07am ET

Bad bets on the U.S. subprime mortgage market, as shown countless times in the past few months, can be deadly—or at least markedly unpleasant—for hedge funds. Good bets? They can be unspeakably lucrative.

And no one, it seems, bets as well as John Paulson and his Paulson & Co.: The $4.5 billion Paulson Credit Opportunities Fund, set up last year for the express purpose of betting against subprime, is reportedly up a remarkable 410% year-to-date, after an August surge of 26.67%. A second fund, the $2.3 billion Credit Opportunities II, soared 32% last month and is up 229.67% year-to-date.

The dramatic positive performance has more than doubled the firm’s assets under management to $20 billion.

Paulson’s event-driven fund, which primarily invests in distressed debt, is up 68.52% year-to-date after adding 5.21% in August. Paulson’s Midas touch extends even to his non-credit offerings: His flagship merger arbitrage is up 43% in 2007, though it was essentially flat (comparatively) last month, rising just 0.56%.

RELATED STORIES

Paulson & Co. Banks On Subprime Woes
Hedge Funds Seek SEC Help For CDS Worries
Paulson Hits Jackpot With Subprime Shorts


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...