Paulson Returns Investor Money In Gold, Credit, Special Situation Funds

John Paulson's hedge fund, which a little less than a decade ago was the most desired place for buyside employment on Wall Street, is imploding.

Just days after the Post reported that the firm fired its heads of equity and credit trading amid freefalling P&L as the one-hit wonder has so far failed to repeat the success of his blockbuster subprime megatrade, amid shrinking AUM which has tumbled from $38bn in 2011 to under $10bn now (of which 80% is Paulson' own money), today Paulson Capital took a decisive step to becoming a family office - or perhaps just shutting down - when, as Bloomberg reported the fund's  gold and special situations hedge funds are returning client capital "as the firm narrows its focus."

Additionally, one of the firm’s Credit Opportunities funds is also forcing clients to redeem, according to Bloomberg sources, although a second credit fund - arguably the better performing one - will remain open, and investors have the option of moving their money into that offering. Investors can also switch into the merger-focused Pure Spread fund and the European Event Equities fund. They probably won't.

Amid the termination of its core traders and the return of capital, Paulson hopes to return to his roots of merger arb and distressed investing, as Bloomberg previously reported.

So is the inevitable next step downsizing to a family office and returning all outside capital?

For now, he has no plans to turn the firm into a family office, and is re-focusing on distressed debt and merger arbitrage, people close to Paulson say. A representative for the firm declined to comment about changes to the funds.

“We are rightsizing the firm to focus on our core expertise in areas that are growing,” the fund said in a statement on Friday, a euphemism for scrambling to do anything in our power to avoid a forced liquidation of all our positions.

For now Paulson's equity funds are said to remain operational, which is why we will save a table of Paulson's top 10 positions until the liquidation actually begins.

Comments

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In reply to by DillyDilly

ZeroSpam slopz38 Wed, 03/21/2018 - 11:20 Permalink

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In reply to by slopz38

Karl Marxist 107cicero Wed, 03/21/2018 - 12:38 Permalink

"Once I was wading in fortune and fame. Everything that I dreamed of to get a start in life's game.

"Then, suddenly it happened and I lost every dime. But I'm richer by far with a satisfied mind." -- A Satisfied Mind" by Porter Wagoner

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In reply to by 107cicero

gaasp Wed, 03/21/2018 - 09:47 Permalink

re-focusing on distressed debt and merger arbitrage

Hey - As bad as we're doing, just park yourself in this bland fund for a bit while we plunder from folks out there who are actually worse off than we are.  We'll finish the 'family-office' re-branding schtick and you'll be better off than before.

E5 Wed, 03/21/2018 - 11:04 Permalink

Funny how several hedge funds shut down and return the money and people don't fret.

Paulson divests from playing the game he knows is rigged against the positions and people shit on him.

Not having employment commitments allows for you to use the one commodity worth a damn.

TIME.

What is the point of money again?