John Paulson Hedge Fund Loses 20%

Billionaire hedge fund manager John Paulson is well known for his highly successful bets against mortgage backed securities and US financial institutions in 2008. But now, Paulson's $9bn Advantage Plus is down almost 20% in 2011 in part due to bad bets on US financial institutions like Citi and Bank of America.

Over the last few years, Paulson's company, Paulson & Co. has become one of the world's largest and most followed hedge funds. Paulson himself reportedly made more than $5 billion in 2010.

Even Successful Hedge Funds Face Withdrawals

Even the most successful hedge funds can face withdrawals. This was illustrated in June as giant hedge fund Paulson & Co. lost more than $2 billion in assets under management. Although, about the thirds of that amount can be accounted for by market losses, Paulson & Co. likely paid out about $600 million in investor withdrawal requests. In June, Paulson & Co.'s financial services Recovery Fund, lost more than 12%. Paulson's best performing fund was its gold fund, up more than 7% in June.

On the other hand, hedge funds actually did quite well in May in terms of investor flows, taking in more than $4 billion in new assets, even while the industry lost $30 billion in trading the same month.

Source: Market Watch

John Paulson Finally Bullish on Housing?

John Paulson, whose multi-billion dollar hedge fund Paulson & Co. famously profited from the meltdown in the subprime market is now bullish on the housing market. Yes, this is the same Paulson & Co. hedge fund which keeps coming up in the Goldman Sachs investigation as the hedge fund which was not revealed to other parties to be the firm shorting these CDOs.

Paulson believes housing prices will rise 3-5% in 2010 and 8-12% in 2011. Of course, given the recent price stabilization across the national markets, this is not that grandiose of a prediction. It certainly doesn't rival his brazen decision in the middle of the decade to heavily short the mortgage market while 99% of other investors were still clueless. In any case, investors might do well to listen to Paulson. He has been bullish on gold in 2010. So far gold is up about 10% so far in 2010.

John Paulson Eying a Gold Price Spike

John Paulson, the hedge fund manager who made himself famous last year with his large bet against the subprime market, is now making another bet that doesn't bode well for a quick economic recovery.

Paulson & Co.paid $1.3 billion for a stake in AngloGold Ashanti, a South African gold miner. Paulson's subprime bets returned in excess of 100% in some cases. If gold were to rise an equivalent amount, it would likely be a sign of severe economic distress.

Of course, Paulson may be like many hedge fund managers: lucky enough to hit pay-dirt once, but not good enough to do it again and again. Time will tell, but if you want to place your eggs in the same basket with a guy who pretty much nailed the first half of the crisis I can't blame you.

Paulson & Co. Short Financial Sector, Long Individual Names

Paulson & Co. the hedge fund founded by John Paulson has received plenty of attention in recent quarters as his massive short bet on subprime mortgages payed off handily. Since then, many of Paulson's funds have continued to outperform.

During Q4 2008, Paulson made a short bet on financials through SKF, a leveraged short financial ETF. However, he also increased stakes in financial firms including Merril Lynch (deal with B of A now closed), Wells Fargo, Wachovia and others.

Below are Paulson & Co.'s top holdings for Q4:

Top 20 Holdings (by % of portfolio):

1. Rohm & Haas (ROH): 18.36% of portfolio
2. Boston Scientific (BSX): 12.64% of portfolio
3. UST (UST): 11.31% of portfolio
4. Kinross Gold (KGC): 8.66% of portfolio
5. BCE (BCE): 7.7% of portfolio
6. Wachovia (WB): 7.62% of portfolio
7. Philip Morris International (PM): 6.45% of portfolio
8. Mirant (MIR): 5.72% of portfolio
9. Genentech (DNA): 4.68% of portfolio
10. Merrill Lynch (MER): 2.68% of portfolio
11. National City (NCC): 2.54% of portfolio
12. NRG Energy (NRG): 2.02% of portfolio
13. At&t (T): 1.41% of portfolio
14. Ultrashort Financials (SKF): 1.36% of portfolio
15. Embarq (EQ): 1.18% of portfolio
16. Northern Trust (NTRS): 0.79% of portfolio
17. Peoples United Financial (PBCT): 0.72% of portfolio
18. Liberty Media (LMDIA): 0.68% of portfolio
19. Centennial Communications (CYCL): 0.66% of portfolio
20. St. Jude (STJ): 0.54% of portfolio

Top 10 Highest Earning Hedge Fund Managers

Top 10 Highest Earning Hedge Fund Managers in 2007

1. John Paulson (Paulson & Co.)- 2007 Earnings: $3 billion
2. Philip Falcone (Harbinger Capital Partners)- 2007 Earnings:$2 billion
3. Jim Simons (Rennaissance Technologies)- 2007 Earnings: $1 billion
4. Steven Cohen (SAC Capital Partners)- 2007 Earnings: $1 billion
5. Ken Griffin (Citadel Investment Group)- 2007 Earnings: $ 1 billion
6. Chris Hohn (The Children's Investment Fund Management)- 2007 Earnings: $800 million
7.Noam Gottesman(GLG Partners)- 2007 Earnings: $700 million
8. Alan Howard (Brevan Howard Asset Management)- 2007 Earnings: $700 million
9. Pierre Lagrange (GLG Partners)- 2007 Earnings: $700 million
10. Paul Tudor Jones (Tudor Investment Corp.) $700 million