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Komfie Manalo, Opalesque Asia: Hedge fund giant John Paulson, once the darling of the finance world for successfully predicting the collapse of the U.S. housing market and earning him $15bn, is now struggling to convince his investors to stay with him and trust his business instinct.
A report by St. Louis Dispatch Post said that hard times fell on Paulson after a string of bad luck the past year from failed bets in gold, European stocks and pharmaceuticals. Indeed, his Valeant trade cost his hedge fund at least $2bn in losses. His positions in Allergan and Teva Pharmaceutical Industries resulted in a 49% decline of Paulson Enhanced, a leveraged version of the merger arbitrage strategy.
Paulson & Co.'s assets have fallen to nearly $10bn as of end 2015, down from the estimated $36bn the firm managed at its peak in 2011. Of the assets, only $2bn consists of client's money, with the remaining $8bn comprising Paulson's own money.
Paulson's fall from grace
Over the last three years, Paulson's flagship Advantage fund has consecutively recorded double-digit losses. It lost 36% in 2011 and plunged another 14% in 2012, but rallied to post a 26% gain in 2013, a...................... To view our full article Click here
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