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November Brings More Losses for John Paulson

2011 continues to be a difficult year for John Paulson as November saw his funds suffer more losses.

  • Stephen Taub

John Paulson’s troubles persisted in November.

A first look at the performance of three of his funds illustrates the difficulty the hedge fund manager is experiencing in turning around his crumbling funds. In the monthly period through November 29, his Paulson Advantage fund lost 7.46 percent. This brings the full-year decline to 34.74 percent. And this is not even his leveraged fund, whose losses have far exceeded the unleveraged declines. For example, through October when Advantage was down 29 percent, Advantage Plus was off 44 percent. (The month-to-date returns in this particular database span October 25–November 29.)

The Paulson International fund lost 2.44 percent for the monthly period and is now down 12.36 percent for the year. Even the gold fund lost money last month, dropping 1.82 percent. This brought the Paulson Gold Fund Ltd Class A's full-year gain to below 1 percent through November 29.

The struggles came despite Paulson’s stated move to reduce risk in his funds. In mid-November, Paulson reportedly told investors he had cut his net exposure in its main hedge funds to 30 percent, down from 60 percent during the summer. He was said to be waiting until there was more confidence that Europe would gets its debt problems under control.

However, November was a treacherous month for traders overall.  Although the S&P 500 lost just 0.5 percent for the month and the Nasdaq Composite dropped 2.4 percent, the S&P 500 moved 1 percent on 12 of the 21 trading days--six days up and six down, according to Howard Silverblatt of Standard & Poor’s.

At the beginning of the fourth quarter, SPDR Gold Trust was by far Paulson's largest holding. This was followed by the ADRs of gold producer Anglogold Ashanti, Anadarko Petroleum, Capital One Financial and Transocean.

He cut his position in Citigroup and totally unloaded stakes in financial giants JPMorgan Chase, State Street and Northern Trust.