Paulson Protégé Up 175%

Paolo Pellegrini can’t begin soliciting money from his former investors at Paulson & Co. until January. And when he does, he’ll have quite a story to tell.

Pellegrini’s new hedge fund, PSQR Management, is up 175.5% since it began trading in April 2008, according to the firm’s first quarterly report. The fund is up 80.84% this year following a 0.31% drop in September, and rose 52.36% in 2008.

PSQR—a play on P-squared for Pellegrini’s initials—has had six down months in its first 18, including two this year. The fund made most of its money this year in January, soaring 66.94%. The only other month in 2009 that it was up or down more than 1% was February, when it rose 5.81%. The fund’s big returns in December—it rose 23.84%--January and February stemmed from its bearishness on long-date U.S. Treasuries, the firm said in the report.

Pellegrini, one of the architects of Paulson & Co.’s hugely profitable bet against subprime mortgages, left the New York-based hedge fund at the end of last year.