Paulson & Co. Does It Again
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Yes, hedge funds are having trouble, but John Paulson's hedge fund is having another great year. Last year, Mr. Paulson's fund produced more than $15 billion of gains.
This year, the Wall Street Journal reported Paulson & Co.'s three main funds are up between 15% and 25%, which could earn Paulson a $500 million paycheck this year. Last year, Paulson made headlines for personally making over $3 billion.
Paulson is having an incredible year while the average hedge fund is down more than 17%. However, these funds have much less money under management as compared to Paulson's $35 billion under management.
John Paulson is continuing his success of last year by continuing with his bearish stance on housing. Paulson told the WSJ, "We're not macro-players. But because we thought we were going into a recession and the stock market usually falls in a recession, we reduced our long exposure and increased our short exposure."
His profits don't equal last year's because he altered his his trading strategy this year. This year his strategy involved shorting financial shares, which has greater downside risk so his positions were not as aggressive.
His reasoning: The surge in consumer spending over the previous decade resulted from rising debt loads and would now end , leading to a recession, a big drop for stocks, and a surge in volatility, he recalls telling his investors.
Paulson is definitely still concerned about the global economic environment and expects a "tough" recession. He told investors he's not going to spend the firm's cash yet, which accounts for more than 50% of his portfolio.
The WSJ asked Paulson why is he still at it after having such a successful last year?
"It's like Wimbledon," he says Mr. Paulson. "When you win one year you don't quit, you want to win again."
This year, the Wall Street Journal reported Paulson & Co.'s three main funds are up between 15% and 25%, which could earn Paulson a $500 million paycheck this year. Last year, Paulson made headlines for personally making over $3 billion.
Paulson is having an incredible year while the average hedge fund is down more than 17%. However, these funds have much less money under management as compared to Paulson's $35 billion under management.
John Paulson is continuing his success of last year by continuing with his bearish stance on housing. Paulson told the WSJ, "We're not macro-players. But because we thought we were going into a recession and the stock market usually falls in a recession, we reduced our long exposure and increased our short exposure."
His profits don't equal last year's because he altered his his trading strategy this year. This year his strategy involved shorting financial shares, which has greater downside risk so his positions were not as aggressive.
His reasoning: The surge in consumer spending over the previous decade resulted from rising debt loads and would now end , leading to a recession, a big drop for stocks, and a surge in volatility, he recalls telling his investors.
Paulson is definitely still concerned about the global economic environment and expects a "tough" recession. He told investors he's not going to spend the firm's cash yet, which accounts for more than 50% of his portfolio.
The WSJ asked Paulson why is he still at it after having such a successful last year?
"It's like Wimbledon," he says Mr. Paulson. "When you win one year you don't quit, you want to win again."
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