Money managers under the microscope
John Paulson gains Buffett’s Midas touch
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)