John Paulson Has Another Big Year in 2008

Another year, another stellar performance for John Paulson and his family of hedge funds.

His biggest fund, Paulson Advantage Plus, was up 37.6% in 2008. Considering the amount of money under management, and considering the beating that most other major hedge funds took in 2008, this was another unbelievable performance from Paulson.

The fun didn't stop there for Paulson and his investors - the Advantage fund was up 24.0%, while his Credit and Credit II funds were both up over 15%.

With this stellar performance, John Paulson has cemented his stature as one of the most revered and respected hedge fund managers in the world.

Paulson burst onto the scene in 2007 when his bearish bets on the US housing market came to fruition. Paulson's two Credit Opportunities funds were two of the best performing hedge funds of 2007, and a star was born. Paulson made billions for himself and his shareholders, and new capital poured into his company.

Many people were wondering if John Paulson would be able to follow this up with another strong performance in 2008, or if he would turn out to be a one-hit wonder. Paulson ended up proving his doubters wrong after his company turned in another strong year.

I'm hearing that:

-Paulson believes that there are now "numerous" long opportunities in the credit area, and his two Credit Opportunities funds are now 30% long

-Paulson is launching a "Real Estate Recovery" fund in 2009. This fund will invest in "residential land development" and "other distressed real estate".

-$28.8 billion dollars under management at the beginning of 2009

-Paulson reinvested 100% of his gains (after taxes and expenses) back into the funds that he manages

-Paulson is bearish on the US economy and believes it "likely" that the recession will extend into 2010

-believes that the U.S. stimulus package will likely have longer term negative consequences

Apparently none of Paulson's funds had a negative return in 2008 - the worst-performing fund was Paulson International, which returned 7.85% in 2008.

Not a bad year at all for Paulson and his investors.

Filed under: Hedge Fund News