One of the hedge funds run by John Paulson, whose prescient bets against housing where chronicled in the book “The Greatest Trade Ever,” is on track to be the second worst performer of 2012 among the universe of funds tracked by HSBC. Last year, it was the worst. Paulson’s Advantage Plus fund, which uses additional leverage than his other funds, is down 19 percent through the end of October, following a 53 percent loss last year. The fund bests just the Conquest Macro Fund, which is down 27 percent through the end of November.
The firm’s other flagship fund, the Paulson Advantage Fund, is down 13 percent this year, putting it among the top 10 losing funds in the HSBC universe this year as well. Paulson’s funds are underperforming because of a bet on a Euro collapse and subsequent positions in gold and makers of the hard asset. Fast forward: the Euro is little changed on the year and one of the firm’s biggest holdings, South Africa’s AngloGold Ashanti (AU), touched a 52-week low last week. “A potential collapse of the Euro triggered by a Greek default or other event could throw the world into recession and serious financial disorder,” wrote Paulson in the outlook section of his 2011 year-end letter.