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Why do people (investors, media, random passersby on the street, this lady) like to harp on all the money John Paulson has lost in the past couple years, despite the fact that they could be talking about his new hot-ish streak? Why can’t he get a little credit for all of his great investment ideas, instead of relentless bitching and negativity about the ones that haven’t yet panned out? It’s something the hedge fund manager has thought a lot about lately and while “I’m surrounded by fucking assholes” seems like it could account for some people’s behavior, he’s finally come up with what seems like a pretty good general explanation: it’s those damn gold funds. Sure, they’ll make money one day but first they’ve got to lose a lot and reading that “have lost forty seven percent for the year” distracts people from “up 3.4 percent!” So, there’ll be no more of that.
John Paulson has a message for investors: Stop paying so much attention to my gold bets. Mr. Paulson, the billionaire hedge-fund manager who has been one of the most bullish investors in the precious metal and suffered deep losses as a result, is eager to focus attention on his better-performing investments, which also dwarf his firm’s gold fund in size. Now, his $18 billion firm, Paulson & Co. will stop including the performance of the gold fund when it shares monthly updates with investors in its healthier funds, according to a letter sent to his investors Thursday. From now on, investors in the gold fund, which manages about $360 million, will receive separate word of the fund’s returns, the letter says. Mr. Paulson, the firm’s founder, has grown frustrated that his firm’s gold troubles have obscured much-better returns from his other funds. Paulson Gold was down 47% for the year through April, including a 26.5% decline in April. The firm hasn’t told investors about May’s returns for the gold fund yet. “At the request of clients and consultants, we will be reporting the performance of our Gold Funds separately to investors in those funds and interested parties,” the letter says, noting that those funds represent only 2% of assets under management. The funds “have received a disproportionate amount of attention over recent months and have detracted attention from the performance and positive developments of our other funds.”
One of Mr. Paulson’s other funds has been on a tear, while others have held up better than gold, spurring the move. The Paulson Recovery fund, for example, which manages about $2 billion and invests in companies that benefit from a broad economic upturn, jumped 4.9% in May and is up 27% on the year, according to the letter to investors. The fund has made money on “insurance, banking, and defaulted securities,” it said. Paulson & Co.’s two credit funds, his biggest, rose 3.6% in May and are up 16.2% for the year through May. They have profited from bets on defaulted and convertible securities, the investor letter says. Meanwhile, his merger funds are up between 8.2% and 17.4% through May, profiting from bets on various deals. Still, Paulson Advantage and Paulson Advantage Plus funds, which bet on anticipated corporate events and manage about $3.6 billion, also have been hit by the decline in gold because of positions in gold stocks. Those funds are up 2.4% and 3.3%, respectively, in May. The Paulson Advantage fund is up 4.4% for the year, while Paulson Advantage Plus is up 6.1% in 2013.
You can start texting compliments to him by dialing “1-900-LUV-JOHN” on your telephone keypad now.