Tags: Paulson | Bullish | Economy | John

Paulson Cuts Bullish Bets on Economy

By    |   Friday, 06 Aug 2010 10:53 AM

Hedge fund titan John Paulson has lost enthusiasm for the U.S. economic recovery, just like many top economists.

His $3 billion Recovery Fund, which has been betting on the rebound, recently cut the value of its position in investments that will benefit from recovery to 107 percent of fund assets from 140 percent previously.

The slowdown of growth in the second quarter hurt Paulson funds, which dropped 12.6 percent, according to a letter he sent to investors.

The economy expanded 2.4 percent in the second quarter, down from 3.7 percent in the prior quarter.

Paulson still believes the global recovery is in place and expects to profit over the next two years from buying shares of distressed companies.

“We are now at the point where further upside in the enterprise is less in the credit but rather in the equities of companies which have or will undergo restructuring, recapitalization and bankruptcy reorganization,” Paulson wrote in the letter, according to the Financial Times.

“A consequence of our portfolio positioning is higher short-term market correlation and volatility.” That volatility has come as economic growth has sagged.

Some other hedge fund managers are more bullish.

Barton Biggs, who dumped half his stock holdings in early July amid fear of a double-dip recession, has loaded back up.

Bullish stock positions now account for 75 percent of his fund at Traxis Partners. “I’ve definitely changed my mind to the degree of risk out there,” he told Bloomberg.

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Hedge fund titan John Paulson has lost enthusiasm for the U.S. economic recovery, just like many top economists. His $3 billion Recovery Fund, which has been betting on the rebound, recently cut the value of its position in investments that will benefit from recovery to...
Paulson,Bullish,Economy,John
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2010-53-06
Friday, 06 Aug 2010 10:53 AM
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