Paulson Hits The Jackpot On His Short British Banks Bet

Paulson & Co's John Paulson is continuing to kill it by shorting UK banks.

John Paulson is the same hedge fund manager who made over $3 billion betting against subprime loans and is now profiting from betting against UK banks.

The NY Post said that Paulson & Co. may have earned more than $400 million for his investors by cashing in on his bets against Lloyds Banking Group Plc (NYSE: LYG) and HBOS Plc.

Paulson, typically very private about his investments, has had to reveal his short holdings because of a new UK law targeting short-sellers.

Filings show Paulson bet against the UK's five biggest banks, including Barclays (NYSE: BCS), Royal Bank of Scotland and Lloyds, as of September. The filings show that Paulson had a short position of 1.76% in Lloyds TSB and a 0.95% position in HBOS. After the two banks merged in January, Paulson converted to a 0.79% short stake in Lloyds Banking Group, representing 129.3 million shares.

But earlier this week, Paulson's holdings have changed. Paulson's stake fell below the reporting requirement of 0.25% set by the UK's Financial Services Authority. This suggests Paulson closed out his short position in the bank and has taken profits since stock has fallen 64.7% this year so far.

The British government has provided assistance to Lloyds, HBOS and RBS (NYSE: RBS) in recent months. The UK government is now Lloyds' biggest shareholder.

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