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Money managers under the microscope

John Paulson gains Buffett’s Midas touch

June 10, 2009

FINANCIAL/Hedge fund manager John Paulson, who made a fortune currectly betting on the U.S. housing market collapse in 2007 and then the broader financial crisis last year, is starting to wield a Midas touch long associated with Warren Buffett.

Thanks to its bearish views, Paulson & Co over the past few years vaulted to the top ranks of the world’s largest hedge fund, multiplying its assets and earning Paulson a king’s ransom.

More recently, though, Paulson has been scooping up stakes in some beaten down companies. The latest winner: CB Richard Ellis. Earlier today the world’s largest real estate services firm said it sold $100 million of stock to Paulson & Co.  Shares surged 15 percent on the news.

Investors are poring over his holdings with the same fervor they track investment moves made by Buffett, widely known as one of the world’s most successful investors.

Earlier this year, Paulson was part of an investor group that acquired failed lender IndyMac Bancorp, providing a small vote of confidence in the recovery of the U.S. banking system.

Less comforting has been his views on gold, historically a hedge against inflation. In March gold miner Anglo American announced the sale of its remaining 11.3 percent stake in AngloGold Ashanti Ltd to Paulson for $1.28 billion. In his latest SEC disclosures, Paulson also reported large new positions in SPDR Gold Trust, Gold Fields and the Gold Miners ETF.

Gold futures and mining companies have surged as many investors share Paulson’s concern about inflation risks. For all our sakes, we’ll have to hope Paulson is wrong this time.

(Photo: Paulson testifies before U.S. House committee hearing in November 2008/By Jonathan Ernst)

Comments

hey thanks for linking to our piece, much appreciated. While we share your view that Paulson sees inflation in our future, do note that the large gold position (via GLD) was apparently bought as a hedge for their firm, since one of their fund share classes is denominated in gold (rather than say US dollars or Pounds Sterling).

But, even knowing this, it makes you wonder why he would also buy so many large stakes in gold miners too. So, it’s fair to say he is doing more than just hedging his firm’s fund share class at this point and also has inflationary expectations.

Thanks again.

Jay

 

This man has vision, is an independent thinker and knows his stuff. He is successful because he doesn’t follow the rest of the herd.

 

Wow it is very concerting to know that some hedge fund managers have got the gumption to take heavy positions against the overwhelming trends. Irrational exuberance isnt so hard to spot after all!!

 

John Paulson has cleary eclipsed the other Paulson (Hank) who did not cover himself with glory during the crisis.
Paulson funds have performed very well, and what is remarkable, under low volatility and low correlation to the market.

Posted by Joe Blog | Report as abusive
 

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