Hedge fund titan says hedge funds are like a game. “Some people like playing chess, some like backgammon. This is like a game, and playing games is fun,” he says, dispensing with any niceties about serving his clients. “It’s more fun when you win.” John Paulson About Hedge Fund Games
“I’m still relatively young, you know, being 56,” he says. “If you look at Soros—he’s 81, I think. Buffett, he’s 81. … How old is Icahn?” Even though he could easily stop working, he can’t imagine it. “Some people like playing chess, some like backgammon. This is like a game, and playing games is fun,” he says, dispensing with any niceties about serving his clients. “It’s more fun when you win.”
John Paulson says he’s trying to get out of the fortune-telling business and that his funds are now much less dependent on reading the economic future: “We’ve gone back to our traditional strategy, which is operating with smaller amounts of net exposure, and hedges in the portfolio.” There are hints that it may be working. After a brutal April, the downswing in his funds leveled off in May, although his gold fund continued to slide. His general views on the U.S. economy would seem to echo what some investors may be feeling about their Paulson holdings: It’s “doing OK, but it’s not as strong as people would like.”
Now that he more money than God, hedge fund boss Paulson is casting about, trying to figure out how to best deploy his influence. Like many a Wall Street billionaire before him, he is wading into politics: He and his employees have been contributing heavily to House Speaker John Boehner, and in 2011 he personally donated $1 million to the pro-Mitt Romney super PAC Restore Our Future. On April 26, Paulson hosted a fundraiser for the GOP presidential candidate at his New York townhouse.
The founder and manager of hedge fund Paulson & Co, who made his fortune and fame by betting against the subprime mortgage market, went so far as to tell investors in January that last year’s big losses, including a 50 percent decline in his popular Advantage Plus fund, were an “aberration.”
Many investors are still waiting to see the dramatic turnaround Paulson has vowed to deliver.
Halfway through 2012, Advantage Plus is down again, losing 10 percent through May. Another big portfolio that bets on gold – once a bright spot for Paulson – was also in the red. In both cases, he blamed losses in gold stocks for the declines.
This has taken a huge bite out of the hedge fund assets, which have fallen to $22 billion from $38 billion early last year, according to investors. Redemptions were substantial, but poor performance accounted for the bulk of the drop, they said.
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