John Paulson Takes a Bath on Sino-Forest Corp.
Next time that you make a poor investment decision and end up taking a loss, just remember - even the best investors and traders in the world make mistakes as well.
Case in point - John Paulson, the multi-billionaire who recently took a very large loss on Sino-Forest Corp.
As of April 29th, John Paulson's Paulson + Co. Inc. owned 34.7 million shares of Sino-Forest.
In early June, Sino-Forest Corp. was rocked by a research report that was released by Muddy Waters LLC, which is an investment firm that is run by Carson Block.
In their report, Muddy Waters LLC asserted that Sino-Forest Corp. was a "fraud". Amongst other things, Muddy Waters LLC said that Sino-Forest Corp. was massive exaggerating its assets and that its capital raising is a "multi-billion dollar ponzi scheme".
Shares of Sino-Forest Corp. tanked shortly after the report was released and have yet to recover. Before the report was released, Sino-Forest Corp. was trading at $14.46 on the Toronto Stock Exchange. Earlier today, the company closed at just $1.99.
Earlier today it was revealed that Paulson + Co. Inc. had sold their entire stake in Sino-Forest Corp. The difference in the value of Paulson's stake in the company between April 29th and June 17th? About $720 million. While we will probably never know exactly how much Paulson's hedge fund firm lost on Sino-Forest Corp., we do know that it was a very embarrassing misstep for Paulson, who has seemed to be able to do no wrong over the past 4 years.
The moral of this story? Don't feel too bad if you take a loss every now and then, as even the best investors in the world, with their unlimited resources and cutting-edge technologies, still slip up every now and then.
Source: Bloomberg.com - Paulson May Deal Clients $720 Million Loss
Filed under: Hedge Fund News