Paulson Hit With $2 Billion In Redemption Requests, Likely Source Of Recent Gold

[JohnQPublic]

Paulson Hit With $2 Billion In Redemption Requests, Likely Source Of Recent Gold Market Liquidations (http://www.zerohedge.com/article/paulson-hit-2-billion-redemption-requests-likely-source-recent-gold-market-liquidations)

Submitted by Tyler Durden on 07/08/2010 13:27 -0700

Absolute Return+Alpha reports that John Paulson's $33 billion hedge fund is now substantially lighter in AUM courtesy of scared investors pulling $2 billion in redemptions by the end of June. Whether this was driven by the disclosures of the fund's participation in the allegedly illegal Abacus transaction, or the fund's deplorable performance in June is unknown and irrelevant. What is relevant is that this confirms our suspicions regarding volatile moves in gold in recent days, are driven primarily by liquidations, most likely those emanating from John Paulson's gold portfolio, which as of the most recent 13F, accounted for 30% of the fund's total assets via ETFs (GLD), miners and other secondary exposure.

[Glass]

Hedge fund star shines after gold bet [size=10pt]
JOHN Paulson made $US4 billion ($A4.03 billion) betting against newfangled mortgage investments. But he made even more betting on an old-fashioned investment: gold.

Mr Paulson, a hedge fund manager who sprang to fame when the American housing market collapsed, personally made about $US5 billion in 2010, according to two investors in his company.

How? Mr Paulson bought gold - lots of it. His firm, Paulson & Co, owns securities that represent the rough equivalent of 96 tonnes of the metal.
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It is an outsize wager by almost any standard. Mr Paulson's firm does not actually own all that gold. But if it did, it would be sitting atop more gold than the Australian government. Mr Paulson himself would be holding more gold than Bulgaria.

Mr Paulson is known for betting big. His payday for last year exceeds the $US4 billion he made for 2007. He became one of the most celebrated hedge fund managers in the business after his firm shorted subprime investments. Last year's income was the culmination of a remarkable comeback for him.

While his firm oversees about $US36 billion of assets in a range of hedge funds, the bulk of his personal fortune is invested in his funds that buy securities linked to the price of gold. Gold jumped almost 30 per cent last year. So far this year, however, it has fallen almost 6 per cent.

While some other hedge-fund stars turned in strong performances last year - Appaloosa Management's David Tepper, Third Point's Daniel Loeb and Pershing Square's William Ackman, for instance - Mr Paulson's payday probably dwarfed theirs, as he oversees funds that are substantially bigger.

Throughout much of last year, Mr Paulson's funds lagged the market. Amid questions about whether the funds had become too big to beat the markets or whether Mr Paulson had lost his touch, some investors asked for their money back midyear.

JOHN Paulson made $US4 billion ($A4.03 billion) betting against newfangled mortgage investments. But he made even more betting on an old-fashioned investment: gold.

Mr Paulson, a hedge fund manager who sprang to fame when the American housing market collapsed, personally made about $US5 billion in 2010, according to two investors in his company.

How? Mr Paulson bought gold - lots of it. His firm, Paulson & Co, owns securities that represent the rough equivalent of 96 tonnes of the metal.


It is an outsize wager by almost any standard. Mr Paulson's firm does not actually own all that gold. But if it did, it would be sitting atop more gold than the Australian government. Mr Paulson himself would be holding more gold than Bulgaria.

Mr Paulson is known for betting big. His payday for last year exceeds the $US4 billion he made for 2007. He became one of the most celebrated hedge fund managers in the business after his firm shorted subprime investments. Last year's income was the culmination of a remarkable comeback for him.

While his firm oversees about $US36 billion of assets in a range of hedge funds, the bulk of his personal fortune is invested in his funds that buy securities linked to the price of gold. Gold jumped almost 30 per cent last year. So far this year, however, it has fallen almost 6 per cent.

While some other hedge-fund stars turned in strong performances last year - Appaloosa Management's David Tepper, Third Point's Daniel Loeb and Pershing Square's William Ackman, for instance - Mr Paulson's payday probably dwarfed theirs, as he oversees funds that are substantially bigger.

Throughout much of last year, Mr Paulson's funds lagged the market. Amid questions about whether the funds had become too big to beat the markets or whether Mr Paulson had lost his touch, some investors asked for their money back midyear.

But those who stayed were rewarded. In the final quarter of the year, many of Mr Paulson's core stock holdings rose substantially. His two largest funds, with a combined $US18 billion in assets, the Advantage and Advantage Plus fund, were up 11.6 per cent and 17.6 per cent by the end of the year.

The average hedge fund gained a little more than 10.5 per cent in 2010, a lukewarm year for many hedge fund managers.

Mr Paulson invested heavily in gold believing the dollar would lose value in the coming years.


Link...... (http://www.theage.com.au/business/hedge-fund-star-shines-after-gold-bet-20110129-1a8yw.html)