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Paulson Reaps Rewards of Real Estate Rebound

By Dan Weil   |   Friday, 07 Dec 2012 07:47 AM

Hedge fund star John Paulson made his name and fortune on the housing collapse that began in 2007, and now he’s profiting from the real estate recovery.

The value of properties in his firm’s Paulson Real Estate Recovery Fund has risen about 100 percent to $298.4 million since the fund began in 2009, a Paulson & Co. executive said Wednesday at the fund's annual meeting, according to The Wall Street Journal.

To be sure, that sum is a drop in the bucket compared with the company’s $19 billion in assets as of August. But this success represents a welcome contrast for Paulson to the well-publicized struggles of some of its other funds.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The real estate fund’s main holdings are raw land, Extended Stay Hotels and CNL Hotels & Resorts, according to The Journal.

In comments at the meeting, Paulson said the real estate market already is coming back in battered parts of Florida, California, and Arizona. And he sees further gains in coming years.

Overall hedge fund performance has been mediocre this year. The Morningstar MSCI Composite Hedge Fund Index rose 4 percent through October, lagging far behind the 12 percent gain registered by the Standard & Poor’s 500 Index.

“Many hedge funds turned into mutual funds — but with higher fees and worse performance — this year,” Mike Murphy, who runs hedge fund Rosecliff Capital, told CNBC.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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