Does this guy look worried?
Investors in Paulson & Co.’s Advantage funds did not have a great year. It wasn’t quite 2011, but a 36% loss in no less unpleasant just because you suffered a 51% loss three years earlier.
On the other hand, losing 51% and surviving—nay, thriving—does mean that a 36% loss won’t necessarily kill your confidence. And old J.P., he’s as confident as ever, and has a message for those who lost 36% with him last year or who are having second thoughts about investing with him this year on account of said loss:
His merger-arbitrage strategy—you know, the one that was all of basically flat last year?—can’t miss in 2015.
Armed with a near-record amount of money to bet on mergers, Paulson is banking on the notion that some of the fund’s poorest performers in 2014 will reverse course. “Overall, the fund experienced higher than expected volatility in the second half of the year due to uncorrelated events impacting some of our largest positions,” Paulson told his investors in a monthly update….
About broken mergers that weighed on performance, Paulson said in the investor update, “we believe some of these events will not impact the ultimate outcome of our positions and, in some cases, we capitalized on the volatility by adding to the positions at a lower cost basis.”