Disappointed in how your portfolio fared last year?
Dont look for any sympathy from John Paulson. The hedge
fund giant personally lost roughly $3 billion last year. That
$3 billion is the amount his own capital in his funds decreased
in value in 2011.
But things would have been even worse for Paulson had he
been invested in the same shares of his funds as most of his
investors. Except for the Paulson Gold fund, his funds have two
classes: a conventional class and a gold class, which leverages
up and uses the borrowed money to invest in gold futures and
exchange-traded funds. As we
reported a year ago, most of Paulsons personal money
was stashed in the gold shares of his funds; and
those shares lost 9 to 15 percentage points less than the
regular shares of the same funds. One of them the gold
shares of Paulson Partners made money last year, rising
4 percent. So while regular shares of all of the funds on
average lost about 33 percent last year, the gold shares lost
closer to 20 percent, on average.
Here is how it shakes out:
It gets worse for many of Paulsons investors who eagerly
jumped into his various funds after they racked up triple-digit
gains in 2007 but that are now in the red. They include
investors in Advantage and Advantage Plus (the latter uses
leverage), which accounted for more than half of the
firms assets at the beginning of 2011, including the gold
Paulson wouldnt comment.