John Paulson

[winston]

John Paulson: Sell Bonds; Buy Stocks; Double Digit Inflation Coming
By ROBERT LENZNER

It could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks.

Multibillionaire hedge fund operator John Paulson, the investment genius who made a killing going short subprime mortgages a few years ago, told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.

Paulson’s warning to sell U.S. government bonds is one of the latest signs that the most successful investors of this generation believe the run up in bonds is over. Paulson especially underscored the attraction of equities with earnings yields of 7%-8% compared to the 2.6% pittance available on 10-year Treasuries.

Paulson listed his favorite blue-chip stocks; JNJ (Johnson& Johnson) at a 3.8% yield; KO(Coca Cola);PFE, 4% yield., as well as C (Citigroup), BAC (BankofAmerica) and STI (Suntrust Banks) and RF (Regions Financial).

Paulson is a pro at buying the distressed bonds of bankrupt companies, and then converting the debt to equity in reorganization and benefiting from the potential run up. He mentioned one of his greatest plays — K-Mart, which emerged from bankruptcy at $10 a share and then skyrocketed to $190 a share.

His crystal ball is for 2% GDP growth for 2011 and 2012 and he warns that the Fed’s promise of quantitative easing should contribute to double-digit inflation over the next few years.

As this is the best time in 50 years to buy homes, Paulson advised his listeners, crowded into 3 separate dining rooms, to issue 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

“If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”


http://blogs.forbes.com/robertlenzner/2 ... =dailycrux

[millionairemind]

John Paulson: Sell Bonds; Buy Stocks; Double Digit Inflation Coming
By ROBERT LENZNER
http://blogs.forbes.com/robertlenzner/2 ... =dailycrux

Don't quite understand this.

If double digit inflation is coming, that means interest rate will have to rise in order to combat this inflation. This is not dissimilar to what Paul Volcker did back in 1979-1982.

That inflation and high interest rate KILLED the stock market.

If the interest rate is going to be raised to more than 8% to bring down the inflation monster, than isn't it better to put money in bonds then???

[kennynah]

these are geniuses.... they are too smart for me to understand when they utter the simplest of words...

[mrEngineer]

John Paulson: Sell Bonds; Buy Stocks; Double Digit Inflation Coming
By ROBERT LENZNER
http://blogs.forbes.com/robertlenzner/2 ... =dailycrux

Don't quite understand this.

If double digit inflation is coming, that means interest rate will have to rise in order to combat this inflation. This is not dissimilar to what Paul Volcker did back in 1979-1982.

That inflation and high interest rate KILLED the stock market.

If the interest rate is going to be raised to more than 8% to bring down the inflation monster, than isn't it better to put money in bonds then???

I guess what he meant was to buy stocks and commodities now instead of bonds to anticipate inflation. But remember to sell them when the govt rises the interest rate. At that point, bond prices will be lowest and he will probably tell you to buy bonds then (and maybe convertible ones.. lol).

[kennynah]

i could not have thought of such a brilliant investment idea...no wonder this person is john paulson, whoever he is

[winston]

Paulson Hedge Fund Said to Jump 12% in Sept., Erase Loss
By Kelly Bit

John Paulson, who became a billionaire by betting against U.S. mortgage markets, gained 12.4 percent with his main hedge fund in September to erase this year’s loss, said two people briefed on the performance.

Returns at New York-based Paulson & Co.’s Advantage Plus Fund, which uses strategies designed to profit from corporate events such as mergers or bankruptcies, improved as the Standard & Poor’s 500 Index posted its biggest rally for the month since World War II. Advantage Plus fell 4.3 percent in August before beating the S&P 500’s 8.8 percent increase last month.

Paulson’s Credit Opportunities Fund rose 3.9 percent in September, bringing its year-to-date return to 9.6 percent, according to the people, who asked not to be named because the information isn’t public. The Recovery Fund advanced 8.5 percent last month and 7.5 percent this year, while the Gold Fund jumped 5.7 percent in September and 22 percent this year.

Paulson & Co., which oversees about $31 billion, had bet on an economic recovery by 2012 before scaling back its bullish investments in securities earlier this year. Paulson, 54, said he believes the global recovery remains intact, and that he expects to make money in the next two years with the stocks of companies going through bankruptcies, restructurings and reorganizations.

Paulson’s September returns were reported by the Wall Street Journal on Oct. 4.


http://www.bloomberg.com/news/2010-10-0 ... -loss.html

[winston]

Top speculator Paulson is unloading financials

Paulson & Co., the hedge fund run by John Paulson, trimmed positions in Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. in the third quarter as regulatory changes and disputes over faulty mortgages threatened to hurt bank profits.


Source: Bloomberg

[winston]

Hmmm... the plunge in gold prices is in 2011 so he's a hero for 2010.

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Paulson Earned More Than $5 Billion in 2010: Report
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(Reuters) - Hedge fund manager John Paulson personally made more than $5 billion in profit in 2010, which may likely be the largest one-year earnings in investment history, the Wall Street Journal said.

Paulson's latest profit has trumped the nearly $4 billion he made with his "short" bets against subprime mortgages in 2007, the Journal said.

Some of the profits are paper gains, which reflect the rising value of their firms' holdings, and could erode if those investments turn sour, according to the paper.

Other gains were made from selling investments and most of those are rolled back into their funds, the paper said.

A call by Reuters to the offices of Paulson & Co outside regular U.S. business hours was not immediately answered.

Ever since Paulson's funds earned $15 billion on his bet against the housing market in 2007, investors have treated him as a bellwether for the hedge fund industry.

Known for making big, contrarian calls, Paulson said early in 2010 that he expected to see strong economic recovery and a rebound in housing prices. He also made a big bet on gold.

Paulson Advantage Plus Fund ended last year up 17 percent after rising 13 percent in December. His Gold fund gained 35 percent for the year, Reuters had reported on Tuesday.


Source: Reuters US Online Report Business News

[winston]

“Big Short” Paulson Continues To Be “Big Long” By Mark Perry

Back in May, I featured a CNBC report about John Paulson going from “Big Short” to “Big Long”:

Today’s WSJ reports on its front page today that:

“Hedge-fund manager John Paulson personally netted more than $5 billion in profits in 2010—likely the largest one-year haul in investing history, trumping the nearly $4 billion he made with his “short” bets against subprime mortgages in 2007.”
And yesterday MarketWatch reported that:

“John Paulson, head of hedge-fund giant Paulson & Co., turned bullish on the U.S. housing market in early 2010. Now he’s got a fund that’s betting on a rebound.

One of the firm’s latest projects has taken it into the Sonoran Desert in the American Southwest, in search of empty residential-development lots. In November, the firm finished raising capital for the Paulson Real Estate Recovery Fund, gathering roughly $315 million in commitments from investors.

One of the fund’s main strategies is to buy undeveloped tracts of land that already have environmental and building permits. Roads, sewers and electricity may also be in place, but not homes, according to one of the people familiar with the fund.

If the real-estate market recovers enough for developers to start building more new houses, this may be the type of land they buy first. That’s because a lot of the costly, time-consuming preparation work already has been done, the person explained.”

http://www.dailymarkets.com/economy/201 ... -big-long/

[winston]

Paulson's 10 Best New Investment Ideas By Robert Holmes

BOSTON (TheStreet) -- Paulson & Co. founder John Paulson, who earned a record amount last year with the help of gold and bank investments, is now counting on Transocean(RIG_) and BlackRock(BLK_) to keep profits rolling.


http://www.thestreet.com/story/11009277 ... ideas.html