Everybody was talking about it in 2009 and 2010. The best investment ever. The big bet against the US housing market. John Paulson seemed to be the hedge fund manager that could do no wrong.
Until everything was done wrong.
John Paulson made 15 billion dollars for his hedge fund on betting against the US housing market and another 5 billion on betting against financial firms. He has been bullish on gold for years and is the single biggest investor in the gold ETF GLD.
His funds, that were created with a marketing flair as Advantage and Advantage Plus, have suffered greatly in the recent years and 2012 was nothing different. According to the most recent semi-official statistics from HSBC (as of november 30th 2012 for Paulson), his fund Advantage Plus was the third worst hedge fund out of all the funds the bank covers. It reduced 24.36% in value, while Advantage fell 16.81% in in value. This in a year when the S&P 500 climbed 13%.
2011 was even worse, when the funds collapsed in value. Advantage Plus fell by 52.64%, Advantage by 36.96%, Recovery fell by 27.92% and Enhanced fell by 21.55%.
It looked like everything was going off a cliff. Until now:
From Bloomberg
John Paulson, the hedge-fund manager overseeing $19 billion, pared losses in his Advantage Plus fund by gaining 4.5 percent last month, according to a person with knowledge of the returns.
But even after that impressive turnaround in December, the Advantage Pluis fund is still down 19 percent for the year.