Tags: FT | Paulson | 550 Million | Lehman | Bonds | Rebound

FT: Paulson Makes $550 Million as Lehman Bonds Rebound

Tuesday, 05 Jul 2011 12:01 PM

Hedge fund manager John Paulson, who accurately called the housing meltdown and made his firm billions in the process, has raked in a fresh $550 million from a recovery in the value of bonds he bought in failed investment bank Lehman Brothers, the Financial Times reports.

Paulson & Co. made $554 million — before legal fees — on more than 2,000 trades in Lehman bonds that started the day the investment bank filed for bankruptcy in 2008.

The news is welcome for the $38 billion hedge fund, which lost hundreds of millions in Sino Forest, a Chinese tree plantation company.
Paulson & Co. recently sold its 12.5 percent stake in the company, accused of overstating timber holdings, dealing investors a potential $585 million loss.

Paulson, however, defended that deal, saying the fund conducted due diligence on the company before investing, because Sino Forest had reported "outstanding financial results" and "consistently traded at a significant discount to its global forest company peers," The Wall Street Journal reports.

Paulson's decision to sell, the Journal reports, was based on the belief that Sino-Forest's stock may "remain depressed for an extended period of time, even if the investigation clears management."

A noted bull on gold, Paulson earned $4.9 billion in 2010 thanks to bets on gold, shattering his record in 2007, when he earned $3.7 billion by betting that housing market was about to collapse.

Paulson has said the precious metal could hit $4,000 an ounce over the next three to five years.

Gold is currently trading around $1,500 an ounce.

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Hedge fund manager John Paulson, who accurately called the housing meltdown and made his firm billions in the process, has raked in a fresh $550 million from a recovery in the value of bonds he bought in failed investment bank Lehman Brothers, the Financial Times...
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