Unstructured Finance

This summer, it’s the John Paulson show

Hedge fund manager John Paulson has shunned the limelight in recent years but in recent weeks it’s a different story, with the 57-year-old manager not only giving his first ever TV interview, he’s also set to take the stand in one of the most closely-watched trials in the country – the civil case against former Goldman Sachs trader Fabrice Tourre.

Tourre’s lawyer Sean Coffey said in a Manhattan federal court on Friday morning they intended to call Paulson to testify in the trial. The U.S District Judge overseeing the trial estimated Paulson would probably take the stand August 1.

Tourre is accused of misleading investors on a 2007 subprime mortgage deal that Paulson’s hedge fund, Paulson & Co, was betting against. Paulson’s firm had actually helped to select the securities that were packaged into the deal. The SEC says Tourre told investors that Paulson’s firm was investing in Abacus, suggesting he expected the price of the securities to rise, when actually the hedge fund was shorting it.

The shorting of the deal, known as Abacus 2007-AC1, was part of Paulson’s broader bet against the U.S. housing market in 2007, which earned him Wall Street fame, and billions of dollars. But after two banner years, Paulson’s returns nosedived, attracting a spotlight he neither wanted or sought out.

But 2013 is shaping up to be a better year for Paulson, with several of his biggest funds posting double-digit returns through June. And as his funds climb he is clearly more amenable to the media glare, doing his first ever TV interview this week as part of CNBC’s Delivering Alpha conference.  He talked housing; gold; M&A deals… He wasn’t asked about the Tourre trial.

Pacino, Papandreou, Panetta, Paulson: Welcome to SALT 2013

The SkyBridge Alternatives Conference – the annual hedge fund blowout better known as SALT, is a month away. And the official agenda for the three-day bacchanal, which sees thousands of hedge fund investors, allocators and hedge fund hangers-on descend on Las Vegas in the second week of May, has been released.

Many regular SALT-goers will tell you, of course, that as the event has grown in popularity its official agenda has become but one part of the conference. A sideshow to goings-on inside the Bellagio are the unofficial meetings going on outside, in the hotel’s poolside cabanas.

But SALT gate-crashers – a growing group of people who don’t pay for tickets to the conference but rock up to the Bellagio to network poolside with SALT’s paying guests – will be disappointed to know that the cabanas are a costly and official part of the event this year. The bungalows were all scooped up by SALT organizers, according two people familiar with the plans, and offered to guests for $20,000 for duration of the conference, as part of a sponsorship package that includes branding and passes to attend the event.

Hedge fund scorecard 2012: Mortgage masters win, Paulson on bottom again

Mortgage funds roared home with returns of almost 19 percent last year, trouncing all other hedge fund strategies and beating the S&P 500 stock index, which rose 13 percent.

BTG Pactual’s $245.5 million Distressed Mortgage Fund, which invests primarily in distressed non-agency Residential Mortgage-Backed Securities (RMBS), returned about 46 percent for the year, putting it at the top of HSBC Private Bank’s list of the Top 20 performing hedge funds and making it one of 2012′s best performing funds.  Bear in mind the the average hedge fund gained only 6 percent last year.

HSBC’s hedge fund platform features hundreds of funds, including many of the industry’s biggest and best known managers, and the bank releases regular performance updates throughout the year.

Another black eye for Bruce Berkowitz

By Katya Wachtel

This year has been cruel to many money managers, and one stock-picker giving John Paulson a run for his money as the worst performing manager of 2011, is Fairholme Capital Management’s Bruce Berkowitz.

Berkowitz’s flagship Fairholme Fund has suffered huge losses on AIG, The St. Joe Company, Bank of America and Regions Financial. His bet on Sears can now be added to that laundry list of losers.

Today the struggling retailer announced plans to close up to 120 stores, the share-price tanked, and as one of Sears’ largest shareholders, Berkowitz is likely nursing some ugly wounds.

John Paulson’s lost advantage

By Matthew Goldstein

Hedge fund titan John Paulson has a shrinkage problem.

The billionaire manager’s flagship Paulson Advantage funds are quickly losing altitude after peaking with $19.1 billion in assets under management in March. As of the other day, the combined AUM of the Paulson Advantage and Advantage Plus funds had fallen to $15.7 billion, according to investor sources.

The Advantage funds account for roughly 44 percent of the $35. 2 billon in assets under management at Paulson. The two so-called event driven funds  long have been the manager’s largest.

And the July performance numbers for the Advantage funds should be ugly. A source tells us the Advantage Plus fund, which is a leveraged version of the plain vanilla flagship fund, was down 4.63 percent in July. With that decline, the Advantage Plus fund is down a little over 21.6 percent for the year. The plain vanilla Advantage fund is believed to be down around 15 percent for the year.

John Paulson and his god-like status

By Matthew Goldstein

By most objective measures, hedge fund magnate John Paulson isn’t having a particularly good year.

His Paulson Advantage Plus fund lost nearly 6 percent in May. His Paulson & Co. fund empire is believed to have absorbed a $300 million paper loss when shares of Sino-Forest got hammered in the wake of a critical report from a noted short-seller, who claims the company has overstated the value of its lumber holdings. And the bullish bet he’s made on a rebound in the housing market appears to be several years too early.

Then again, this is John Paulson–the mastermind of the mega subprime housing bet, which bolted him to fame and riches and certified his rock star status in the $2 trillion hedge fund industry. Today, his New York firm controls about $37 billion in assets and seems to keep taking in new investor money every day.

DealZone Daily

The world’s largest credit and debit card processor Visa is to pay some $2 billion for CyberSource, a company that helps retailers take online payments, including from mobile phones. Analysts estimate Visa already has 45 percent of the online market and the deal will only serve to boost the company’s position further.

The U.S.’s largest mall owner Simon Property Group has sent a revised recapitalization plan to rival General Growth Properties, which would see new investors, including Oak Hill Advisers, RREEF, ING Clarion Real Estate Securities and Taconic Capital, inject a further $1.1 billion into the business. Simon has already offered to invest $2.5 billion for about a quarter of its rival, while  Paulson & Co — the U.S. hedge fund that bet against Goldman Sachs Abacus mortgage product — injecting a further $1 billion.

Film moguls Bob and Harvey Weinstein and backer Ron Burkle could reach a deal for Walt Disney’s Miramax Films within days, despite a rift between the Weinsteins and one of their minority shareholders Mark Cuban.

Simon takes fresh tack in bidding battle for bankrupt GGP

Simon Property says it is teaming up with hedge fund Paulson to try to unseat Brookfield Asset Management as the key investor in General Growth Properties as the mall operator angles toward an exit from its bankruptcy.

Simon said it and Paulson would invest $2.5 billion to help General Growth exit bankruptcy, and more importantly, make the investment without taking any warrants to buy shares like Brookfield and other investors have under its current plan, Paritosh Bansal reports.

Paulson, the $32 billion hedge fund run by billionaire investor John Paulson, has made a commitment to co-invest $1 billion with Simon. Sources told us earlier this week that Simon was looking at ways to revise its offer for GGP, which was seen getting hung up on anti-trust concerns.

(Another) Paulson payday

A large (and not entirely unexpected) payday for John Paulson’s European arm.

RTXNR8MFour members of Paulson Europe LLP shared 50.8 mln stg for the year to March ’09, up from 37.1 mln stg the previous year, company accounts show.

The highest paid member was likely to be John Paulson’s own company, Paulson Limited. But a tidy 22.2 mln stg was nevertheless divided between fellow members Nikolai Petchenikov, Harry St. John Cooper and Mina Gerowin Herrmann.

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