InvestIdeas

John Paulson looking to buy distressed debt: report

(Reuters) - John Paulson, who runs the $36 billion hedge fund firm Paulson & Co, is looking to buy distressed mortgages and distressed debt, despite being bearish on the overall economy, Bloomberg reported.

Paulson wrote in a 2009 outlook to investors that he is interested in investing in debt restructurings, bankruptcies, strategic mergers and financial recoveries, the agency said.

His largest fund, the $13 billion Paulson Advantage Plus, has risen about 38 percent through Dec 19, the agency said, citing the undated report.

The hedge fund industry is facing its worst year ever with heavy losses prompting large numbers of investors to request their money back. A large number of funds have imposed restrictions on investor redemptions.

In his letter, Paulson criticized his peers and their tendency this year to block or curb clients' attempts to get their money back, the agency said.

"We think it's a mistake for managers to use gates and other tools to limit investor access to their funds," Paulson said.

A spokesman for Paulson could not be immediately reached by Reuters for comment.

Paulson & Co, along with J.C. Flowers & Co and Dune Capital Management, is a prospective member of a consortium to buy the assets of failed mortgage lender IndyMac, a source familiar with the matter told Reuters earlier this week.

In this month's Bloomberg Magazine, John Paulson is the cover story. Very nice story.

His strategy was so simple last year:-
1) Short Financials
2) Long Healthcare, Utilities and Tobacco

"Risk arbitrage is not about making money. It's about not losing money".

"We try to minimize market correlations. If you dont, you would be exposed when a market event happens".

Paulson is now 50% Cash and for the 50% invested, he has 25% in long positions and 25% in short positions.

"You have to get to the corner first, to be able to see around the corner. We havent gotten to the corner".

"You have to be simple to have a clear strategy".

He is now investing in Restructurings, Strategic Acquisitions, Distressed Credits and Bonds backed by Home Mortgages.

Paulson & Co. Makes at Least $420 Million Shorting RBS Stock
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By Jon Menon

Jan. 27 (Bloomberg) -- Paulson & Co., the hedge fund run by billionaire John Paulson, made at least 295 million pounds ($420 million) since September by short selling Royal Bank of Scotland Group Plc.

Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson’s disclosure indicates he borrowed almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.

RBS closed at 12.1 pence on Jan. 23, down 94 percent since Sept. 19, as the bank said it would take as much as 20 billion pounds of writedowns in 2008 and post the biggest loss in U.K. history. That decline indicates Paulson made 295 million pounds, assuming it had a 0.25 percent short position on Jan. 23. Paulson, the 53-year-old founder of the $36 billion New York-based hedge fund, made more than $3 billion in 2007 by judging that the U.S. housing market and subprime mortgages would collapse.

Paulson, who couldn’t immediately be reached for comment, also profited from shorting Barclays Plc the Financial Times reported earlier.

The Financial Services Authority, Britain’s market regulator, lifted on Jan. 16 a short-selling ban on financial companies including RBS and Barclays. The restrictions were imposed last September after politicians and investors blamed hedge funds for destabilizing markets and interfering with the banks’ plans to increase capital by selling shares.

‘Distasteful’

“It does appear to anyone from the outside looking in a bit distasteful,” said Michael Trippitt, a London-based analyst at Oriel Securities Ltd. who has a “reduce” rating on RBS. “To allow there to be a lift on the ban was plain daft.”

Short sellers borrow shares and sell them with plans to buy them back at a lower price. FSA Chairman Adair Turner told BBC Radio 4 on Jan. 22 that there was no evidence that short selling had led to significant falls in banking shares. The FTSE 350 Banks Index declined 58 percent in the last six months, with RBS, Lloyds Banking Group Plc and Barclays falling the most.

are hank and john, brothers?

haha.. no lah..

Paulson is a Hedge Fund Mgr formally from Bear Stearns. His fund returned 580% when he bet on the collapse of the subprime market in 2007.

Soros invited him to lunch to find out about his strategy.

http://www.telegraph.co.uk/finance/news ... -list.html

Paulson Likes Distressed Assets Amid Global Recession (Update1) By Tomoko Yamazaki

Feb. 26 (Bloomberg) -- Distressed assets offer the best investment opportunities this year as the global recession deepens, billionaire hedge-fund manager John Paulson said.

“The decline in the market has created a very good buying opportunity,” Paulson, 53, whose New York-based Paulson & Co. oversees about $30 billion, said in a speech at a hedge-fund seminar hosted by Societe Generale and Lyxor Asset Management in Tokyo today. “Distressed opportunity in the U.S. is shaping up to be the best opportunity in a lifetime.”

Paulson said he’s focused on assets such as mortgages and debt from bankrupt companies, while in the equities markets he cited the utilities, consumer staples and pharmaceutical industries. Financial stocks remain risky, Paulson said.

In the 15 years since starting its first funds, Paulson & Co.’s one down year was 1998. All his funds were profitable in 2008, with the flagship fund returning about 38 percent, compared with a loss of 19 percent for hedge funds worldwide on average. The 2008 returns came after his funds made more than $3 billion for the firm in 2007 by anticipating the collapse of the U.S. housing market and subprime mortgages.

Investors are chasing distressed assets after more than $1.1 trillion in losses at financial firms globally and frozen credit markets helped drag the U.S., Europe and Japan into their first simultaneous recessions since World War II.

Deep Recession

“In 2009, we expect this recession is going to be deeper and longer than consensus estimates,” Paulson said. “We don’t think we’re through the banking crisis yet. We think that in many cases, losses the banks will experience will exceed their common equities.”

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices, and participate substantially in profits from money invested. Managers typically charge fees equal to 2 percent of client assets and 20 percent of investment profits.

“We’re bearish on the economy, but very bullish on opportunities in front of us,” Paulson said.

John Paulson bets on property recovery with new fund

John Paulson, the hedge fund manager who made an estimated $3.7bn (£2.4bn) shorting the US housing market ahead of its collapse, is placing a firm bet on a medium-term property recovery with the launch of a new fund.

http://www.telegraph.co.uk/finance/fina ... -fund.html

Paulson & Co. to Invest $100 Million in CB Richard Ellis

Real-estate services provider CB Richard Ellis Group Inc. announced hedge-fund operator Paulson & Co., which made billions anticipating a crumbling housing market, will buy $100 million in stock as part of a $550 million capital-raising effort by the company.

John Paulson buying Citigroup shares: report

(Reuters) - Hedge fund manager John Paulson, who bet against financial companies after foreseeing the credit crisis, has been buying Citigroup Inc shares over the past few weeks, the New York Post reported, citing sources.

Paulson bought around a 2 percent stake in Citigroup, a source told the paper. An investor with a 5 percent or higher stake in a company would have to make a disclosure with the U.S. Securities and Exchange Commission.

Sources told the paper Paulson believes Citigroup's assets are undervalued. A spokesman for Paulson declined to comment to the paper on the hedge-fund manager's investment activities.

Paulson's investment moves are monitored by investors after he predicted the implosion of mortgage markets in 2007 and the collapse of banks and other financial companies in 2008.

A spokesman for the hedge-fund manager was not available to comment.

From Dr. Check, The Standard HK:-

Hedge fund manager and billionaire John Paulson has reportedly built up a 2 percent stake in Citigroup over the past few weeks. He believes that Citi's assets are undervalued and should trade between US$5 and US$7 per share. It currently trades at US$5.23.

Paulson's hedge fund recently purchased large stakes in other financials including Bank of America, Capital One, Goldman Sachs and JPMorgan.

Paulson's fund bought BoA shares at around US$15 - it closed on Friday at US$17.98. Paulson sees fair value at around US$30 within the next two to three years.

He made a handsome profit when he short-sold US financial shares during the economic crisis. Now he has turned bullish.

Is Paulson on the right track once more? If so, perhaps we should not be too pessimistic in the short term.