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John Paulson Explains What's Been Going Wrong

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His portfolio has been heavy on disappointments.

"The biggest loss was Sino Forest. We took a nasty hit on it, but there was also other losses," said Paulson during the investor call, which Reuters heard portions of. ...

Paulson said he cut the net long exposure from roughly 81 percent to about 60 percent, and plans to cut it more. "Eighty-one percent was way too high. We cannot operate the fund at that level," he said. "I'd like to bring the risk down further to about 50 percent."

As a long-time owner of large financial companies such as Bank of America (BAC.N) and Citigroup (C.N), Paulson called said the former -- his sixth largest position at the end of the first quarter -- was "somewhat of a disappointment.

He still likes financials, mentioning Capital One and Wells Fargo as names that he's long due to their having less mortgage exposure. And he's short the euro. Which is up 1.2% today.

Paulson: Our bets were too aggressive [Reuters]


John Paulson Ditches Banks, Drums Up Some Business For Them

I think everyone who's ever worked at an investment bank saw at least a little something of themselves in the Journal's fat asshole article this morning. My own feelings are mixed since, for me, investment banking was a lifestyle improvement over a previous job that left me partially paralyzed from overwork (true story! I got better). So in a sense I don't have that much to complain about, but I did, and do, constantly and loudly and now on the internet. Part of what sucks about banking - that I think the Journal article missed - is the frequent pointlessness of your activity: you get on a plane, go see a guy, tell him about this awesome merger or financing or whatever you've got planned for him, shake hands, and fly away never to see him again. And by "never" I mean "not until six months later, after he's printed a deal away from you, when you go and do the same thing, but this time maybe you don't shave." You'd probably still be a fat, stressed, overworked cabbie-puncher if most of your ideas actually got executed, but you'd perhaps be less suffused with metaphysical dread. That's how I'd feel anyway. Then, I blog now. Anyway, a thing that I don't know anything about, and never ever want to know anything about, so don't tell me, is the proper price-to-book trading multiples of life vs. P&C insurance companies and whether there's a conglomerate discount for being in both businesses. So with that as a disclaimer I found this pretty damn convincing: