John A. Paulson’s Gold Bets Net Handsome $5 Billion Profit
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John A. Paulson is a hedge fund manager known for having the Midas touch.
Founder and president of Paulson & Co., a New-York based hedge fund, Paulson is best-known for his tidy $5 billion profit in 2010 (according to two investors in his company) – when the housing market collapsed.
Paulson believed the dollar would lose its value in the coming years and so invested in gold via a gold exchange-traded fund (ETF), SPDR Gold Shares one of the largest ETFs in the world that holds 1,230 metric tons of gold bars in HSBCs vault in London.
John A. Paulson is a hedge fund manager known for having the Midas touch.
Founder and president of Paulson & Co., a New-York based hedge fund, Paulson is best-known for his tidy $5 billion profit in 2010 (according to two investors in his company) – when the housing market collapsed.
Paulson believed the dollar would lose its value in the coming years and so invested in gold via a gold exchange-traded fund (ETF), SPDR Gold Shares one of the largest ETFs in the world that holds 1,230 metric tons of gold bars in HSBCs vault in London.
Paulson & Co owns securities representing the equivalent of 96 metric tons of gold.
If the firm actually owned all that gold, they’d be sitting atop more gold the Australian government – and holding more gold than Bulgaria.
Take a sneak peak at Paulson’s investment portfolio.
If Paulson is known as an unmarkable stock picker, he’s also known for betting big – and making big. His payday for last year exceeds the $4 billion he made for 2007.
The 2010 income was a remarkable comeback for Paulson last year.
While his firm oversees about $36 billion of assets in hedge funds, the bulk of Paulson’s personal investments are linked to the price of gold.
Gold, which jumped almost 30 percent in 2010 – although fallen 6 percent this year.
Other head fund superstars David Tepper of Appaloosa Management, Daniel Loeb of Third Point and Willian A. Achman of Pershing Square performed well last year – but don’t touch the sides of Paulson’s funds.
For most of last year, Paulson’s funds lagged the market and people wondered if the funds had become too big to beat the markets – and investors asked for their money back.
The ones who stayed, cashed out during the final quarter of the year when Paulson’s core stock holdings rose substantially.
Paulson’s largest funds with a combined $18 billion in assets -the Advantage and Advantage Plus (that uses leverage to increase its returns) fund were up 11.1 percent and 17.6 percent by the end of the year.
The average hedge funds gained around 10.5 percent in 2010, considered a lukewarm year.
Investors say Mr. Paulson has about $10 billion of his own money invested within the funds – majority of his money invested in special gold-share class he created a few years ago.
So while the Advantage fund was up 11.1 percent last year. The gold class shares of that portfolio surged 30.8 percent (according to investors in the fund, speaking under anonymity.)
Read the full article from the New York Times.
