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Bet On Gold Nets Paulson $5 Billion

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http://www.nytimes.com/2011/01/29/business/29paulson.html?_r=1&ref=business

John A. Paulson made $4 billion betting against newfangled mortgage investments. But he made even more betting on an old-fashioned investment: gold.

Mr. Paulson, a hedge fund manager who sprang to fame when the housing market collapsed, personally made about $5 billion in 2010, according to two investors in his company.

How? Mr. Paulson bought gold — lots of it. His firm, Paulson & Company, owns securities that represent the rough equivalent of 96 metric tons of the metal.

It is an outsize wager by almost any standard. Mr. Paulson’s firm does not actually own all that gold. But if it did, it would be sitting atop more gold than the Australian government. Mr. Paulson himself would be holding more gold than Bulgaria.

Mr. Paulson is known for betting big. His payday for last year exceeds the $4 billion he made for 2007. He became one of the most celebrated hedge fund managers in the business after his firm shorted subprime investments.

The 2010 income, which was first reported by The Wall Street Journal, was the culmination of a remarkable comeback for Mr. Paulson last year.

While Mr. Paulson’s firm oversees about $36 billion of assets in a range of hedge funds, the bulk of his personal fortune is invested in his funds that buy securities linked to the price of gold. Gold jumped almost 30 percent in 2010. So far this year, however, it has fallen almost 6 percent.

While some other hedge fund stars turned in strong performances last year — David Tepper of Appaloosa Management, Daniel Loeb of Third Point and William A. Ackman of Pershing Square, for instance — Mr. Paulson’s payday most likely dwarfed theirs, as he oversees funds that are substantially bigger.

Throughout much of last year, Mr. Paulson’s funds lagged the market. Amid questions about whether the funds had become too big to beat the markets or whether Mr. Paulson had lost his touch, some investors asked for their money back midyear.

But those who stayed were rewarded. In the final quarter of the year, many of Mr. Paulson’s core stock holdings rose substantially. His two largest funds, with a combined $18 billion in assets, the Advantage and Advantage Plus fund, were up 11.1 percent and 17.6 percent by the end of the year. (The difference between the two funds is that the Advantage Plus fund uses leverage, or borrowed money, to increase its returns.)

So he holds worthless bits of paper which probably has a claim on some gold somewhere with about a dozen other people holding the same claim?

Still good to see he's leveraged, anyone know to what degree he's leveraged up? Sounds like a big collapse would take out his funds if he's leveraged too high.

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http://www.nytimes.com/2011/01/29/business/29paulson.html?_r=1&ref=business

So he holds worthless bits of paper which probably has a claim on some gold somewhere with about a dozen other people holding the same claim?

Still good to see he's leveraged, anyone know to what degree he's leveraged up? Sounds like a big collapse would take out his funds if he's leveraged too high.

Why would a man even need $5billion is beyond me... :blink:

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http://www.nytimes.com/2011/01/29/business/29paulson.html?_r=1&ref=business

So he holds worthless bits of paper which probably has a claim on some gold somewhere with about a dozen other people holding the same claim?

Still good to see he's leveraged, anyone know to what degree he's leveraged up? Sounds like a big collapse would take out his funds if he's leveraged too high.

Pretty crazy this guy has traded his way to $10bn of cash in about 5 years.

What I find encouraging is that most of these hedge fund sages are older guys i.e > 50 years old. Still hope for me yet then on the investing front...

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Pretty crazy this guy has traded his way to $10bn of cash in about 5 years.

What I find encouraging is that most of these hedge fund sages are older guys i.e > 50 years old. Still hope for me yet then on the investing front...

I read something else about this the other day, I think they where suggesting this is a paper profit only, he's probably not cashed his position in, so therefore he could lose it.

I'd be interested to know if he cashed in his 2007 winnings or bet them again.

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Mr. Paulson bought gold — lots of it.

The fool. Had he but listened to RealistBear he would have known that gold was in a bubble and set to crash in 2007 2008 2009 2010 2011.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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