Outside of merger arbitrage, Paulson added to his gold bet, buying nearly $600 million worth of the
SPDR Gold Trust
fund, while he pared a leading stake in
-- an insurer he pushed to break up -- by nearly 20% to $552 million.
Meanwhile, the fund pared stakes in successful distressed investments like
(DLPH - Get Report)
and got out of financials
Capital One Financial
Paulson also exited an underperforming investment in coal sector takeout candidate
and liquidated a $500 million investment in
The fund's M&A arbitrage success also comes as his newest foray into the world of insurance is off to a
In April, he teamed with
(VR - Get Report)
on a $500 million-plus joint investment to create
, 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
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,
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