This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Paulson Goes Old School After Billions in Losses: Street Whispers

Stocks in this article: CBEQSFTDLPHJPMVR

Outside of merger arbitrage, Paulson added to his gold bet, buying nearly $600 million worth of the SPDR Gold Trust (GLD) fund, while he pared a leading stake in Hartford Financial (HIG) -- an insurer he pushed to break up -- by nearly 20% to $552 million.

Meanwhile, the fund pared stakes in successful distressed investments like Delphi Automotive (DLPH) and got out of financials Capital One Financial (COF) and Suntrust Bank (STB).

Paulson also exited an underperforming investment in coal sector takeout candidate Walter Energy (WLT) and liquidated a $500 million investment in Anadarko Petroleum (APC).

The fund's M&A arbitrage success also comes as his newest foray into the world of insurance is off to a loss-making start.

In April, he teamed with Validus Holdings (VR) on a $500 million-plus joint investment to create PaCRe, a Bermuda-based reinsurance company with policies underwritten by Validus and an investment portfolio managed by Paulson & Co.

So far, the venture is down sharply, as Paulson suffers from losses in many of his largest funds.

According to Validus' second-quarter results released July 26, the joint venture lost roughly 10% of the initial investment during the quarter.

Paulson's poor start in the reinsurance business is notable because other hedge fund managers like Daniel Loeb of Third Point LLC and Steven A. Cohen of SAC Capital Advisors have also entered the reinsurance business -- which is essentially insurance for insurers -- as they look for new ways to grow investing capital in an environment marked by investor withdrawals and weak returns.

The fund's investing struggles are well-documented. In July, Bloomberg reported that Paulson & Co. lost money across all of its funds during June. While roughly $50 million in new reinsurance-related losses are unlikely to make a big dent in the performance of Paulson funds, which manage $22 billion in client assets, it is an inauspicious start for the hedge fund manager who is looking for a little luck.

>>View John Paulson's Portfolio

-- Written by Antoine Gara in New York

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,677.90 +216.58 1.32%
S&P 500 1,950.82 +23.71 1.23%
NASDAQ 4,452.7920 +69.9450 1.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs