Paulson Advantage Plus Fund Reportedly Down 20% in 2011
Over the last 4 1/2 years, John Paulson has been one of the most successful hedge fund managers in the world.
Paulson started his run back in 2007 when he successfully bet against the US subprime mortgage market. When the subprime mortgage market imploded in the United States (which led to a massive real estate crash that is still taking place today), Paulson and the investors in his various funds made billions of dollars virtually overnight. Not only did John Paulson become a billionaire thanks to his savvy bet against the subprime mortgage market, but he also made a name for himself and his firm, which led to billions upon billions of dollars in inflows to his funds.
After 2007, many people thought that John Paulson would be a "one-hit wonder".
These people thought that Paulson would trip up and have a down year in 2008. It didn't happen. Paulson's legend grew as he continued to make good calls and even more money for his funds.
These people thought that Paulson would surely lose his Midas touch in 2009. Again, it didn't happen. 2009 brought even more profits for Paulson and his investors, and new investors continued to pour in. Everybody wanted a piece of the hedge fund manager that could seemingly do no wrong.
2010? More gains for Paulson and his funds, which meant more profits, more investors and an even greater legend.
The wheels may have finally fallen off though, as Reuters reported earlier today that Paulson's Advantage Plus fund, which is one of his biggest, has lost 20% of its value over the first five and a half months of 2011. The majority of these losses were incurred during the first two weeks of June, and were largely due to the precipitous decline of Sino-Forest Corp, in which Paulson's firm was reportedly a large investor. Sino-Forest Corp was crushed after investment firm Muddy Waters Research called the company a "pump and dump scheme" that was actively committing fraud.
In addition, Paulson's Advantage Plus fund is reportedly suffering from a drop in bank stocks.
John Paulson has been able to easily attract new funds over the past couple of years thanks to his enviable track record since the start of 2007.
In 2010, Paulson was able to turn things around after a weak start to the year. Will he be able to pull it off again in 2011? If he doesn't, how many of his investors will walk?
Source: Reuters.com - Paulson's Advantage Plus fund off 20 pct this year
Filed under: Hedge Fund News