Billionaire hedge-fund manager John Paulson posted gains in his firm’s main strategies in February as bets on gold, mergers and credit paid off.
Paulson & Co.’s event-driven Advantage Plus fund jumped 9.8 percent during the month and is up 13 percent this year, according to two people familiar with the matter, who asked not to be identified because the information is private. The firm’s PFR Gold Fund rose 18 percent in the month and is up 40 percent for the year and the Paulson Partners Enhanced fund increased 7.4 percent in February to extend gains to 8.8 percent in 2014.
The $21 billion hedge-fund firm, known for successfully betting against the U.S. housing market before the crash, is extending last year’s rebound helped by rising stock markets and a rally in gold. Hedge funds rose 0.8 percent on average in February, as Ray Dalio’s Bridgewater Associates LP gained while Paul Tudor Jones’s Tudor Investment Corp. reported a decline.
Paulson, 58, is driving a rally in his funds with prescient bets on companies in takeovers, a strategy known as merger- arbitrage, where he got his start as a trader. Gold stocks, which drove a 71 percent 2013 loss for Paulson’s dedicated fund, have rallied this year as investors flock to the precious metal amid Russia’s growing military presence in Ukraine and a slump in emerging market currencies.
Armel Leslie, a spokesman for Paulson & Co. with WalekPeppercomm, declined to comment on the returns.
Recoup Losses
Paulson’s Advantage Plus fund still needs to gain 69 percent to recoup losses on wrong-way bets on the U.S. recovery, the euro crisis and gold in 2011 and 2012.
The Paulson Advantage fund, which deploys a similar strategy to Advantage Plus without using leverage to amplify returns, rose 6.6 percent last month and 8.4 percent this year, the people said. The event-driven funds, with $4.4 billion in combined assets as of Feb. 1, rose last month on gains in telecommunications, energy and gold stocks and defaulted securities, one of the people said.
The firm’s PFR Gold Fund must rise 81 percent to recoup losses in 2011, 2012 and 2013 as Paulson bet that bullion and related securities would rally as a hedge against inflation that never materialized. The fund had $327 million in assets as of Feb. 1.
Paulson Partners, an unlevered merger-arbitrage fund, gained 3.7 percent in February and 5.3 percent this year, the people said. The merger funds had $7.5 billion in assets as of Feb. 1, one of the people said.
Its Credit Opportunities fund, with assets of $5.7 billion last month, increased 4.8 percent from gains in post- reorganization equities, bank debt and defaulted securites, bringing returns for the year to 8.8 percent, the people said.
Paulson Recovery climbed 5.6 percent in February on investments in banking, insurance, hotels and financial securities and 5.9 percent in 2014, the people said. The strategy had $2.9 billion in assets as of Feb. 1.
