John Paulson, the money manager who earned about $5 billion in 2010, lost 4.6 percent in his biggest fund in July, according to an investor, as global stock markets slumped and the U.S. economy showed signs of slowing.
The decline left Paulson’s Advantage Plus Fund, which uses strategies designed to profit from corporate events such as takeovers and bankruptcies, down 22 percent this year, said the client, who asked not to be identified because the information is private. The fund’s gold-denominated share class advanced 1.5 percent in July, leaving it down 10 percent in 2011.
Investors can choose between dollar- and gold-denominated versions for most of Paulson & Co.’s funds. The metal jumped 8.5 percent last month as investors sought a haven amid a legislative stalemate over raising the U.S. debt ceiling and concerns that Europe’s sovereign debt crisis may be spreading. The firm’s Gold Fund, which can buy derivatives and other gold- related investments, soared 11 percent in July, leaving it up 2.5 percent for the year.
Paulson, 55, whose New York-based firm manages $35 billion overall, has been betting on an economic recovery by 2012. He lost 11 percent last year through August with his $9 billion flagship fund before performance picked up and returns turned positive as of mid-December. The fund declined 4.4 percent in March to erase this year’s early gains, was little changed in April, slumped 6 percent in May and lost 11 percent in June as Paulson & Co. sold its shares of Sino-Forest, the Chinese forestry company accused by a short-seller of overstating its assets.
Armel Leslie, a spokesman for Paulson, declined to comment.
Paulson’s dollar-denominated Advantage Fund, which employs a similar strategy to Advantage Plus, dropped 3.3 percent last month and 15 percent this year. The gold share class gained 5.2 percent in July and declined 2.1 percent in 2011.
The Recovery Fund, which invests in assets Paulson believes will benefit from a long-term economic recovery, declined 4.9 percent last month and 3.7 percent this year. Its gold share class gained 1.6 percent in July and 5.1 percent this year.
The Paulson Partners Enhanced Fund, which invests in the shares of merging companies, decreased 3 percent last month and gained 2.9 percent in 2011. The gold share class advanced 2.8 percent in July and 12 percent this year.
Paulson’s Credit Opportunities Fund fell 1.3 percent last month and climbed 3.8 percent in 2011. Its gold shares gained 4.3 percent in July and 13 percent this year.
Sino-Forest, which Paulson & Co. held in its Advantage funds, has plunged about 65 percent from its closing price on June 1, the day before Carson Block’s Muddy Waters LLC issued a report accusing the Hong Kong- and Ontario-based company of overstating timberland holdings and production in Yunnan province. Paulson told clients in June that his fund lost C$462 million ($489 million) that month on the investment, which it sold off as of June 17.
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