This Day On The Street
Continue to site
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

Paulson Goes Old School After Billions in Losses: Street Whispers

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 - Get Report) 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 - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DLPH $72.29 -1.90%
JPM $61.90 -3.00%
VR $46.55 -1.10%
AAPL $93.95 0.33%
FB $117.85 -0.61%


Chart of I:DJI
DOW 17,698.80 -192.36 -1.08%
S&P 500 2,058.67 -22.76 -1.09%
NASDAQ 4,759.78 -57.8140 -1.20%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs