And the winner is ....... for 2010

Late Gains Let Paulson Funds Race Ahead in 2010

By Reuters

Thursday, January 06, 2011

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EDITOR'S NOTE: This story has been updated throughout.BOSTON (Reuters)—Hedge fund manager John Paulson's main portfolios realized double digit gains in 2010 after bets that the economy would begin to recover helped fueled a late year recovery that rescued the year's terrible start. Since earning $15 billion in 2007 on a bet that the U.S. housing market would crumble, Mr. Paulson has become one of the world's most closely watched investors. This year's performance cements his reputation. His Paulson's Advantage Plus Fund ended the year up 17 percent after rising 13 percent in December. Through August, the fund had been down 11 percent. His other funds fared equally well with the Advantage Fund gaining 9 percent in December to end 2010 up 11 percent, two investors in the fund said. The investors declined to be identified because they were not authorized to discuss the returns publicly. A spokesman for the fund declined to comment. Mr. Paulson's Recovery Fund rose 14 percent in December to end the year up 24 percent while the Credit fund climbed 6.8 percent to end up 20 percent. Only a few years ago, Mr. Paulson make a risky bet on gold by launching a fund dedicated to the metal — his Gold fund gained 35 percent this year. "This summer I began to think Paulson had lost his mojo, but he proved me dead wrong," said Brad Alford, chief investment officer at Alpha Capital Management. "After beating everyone three years in a row in the worse market in our lifetime in 2008, and now in the raging bull market of 2009 and 2010, I know he is in a league of his own." In 2007 the flagship fund gained 163.8 percent and in 2008, when the average hedge fund lost 19 percent, Mr. Paulson's portfolio climbed 37.9 percent. Mr. Paulson's exact positions in the last three months of 2010 will not be known until mid-February, but big positions in Hartford Financial Services, MGM Resorts and Boston Scientific posted strong gains late last year. Mr. Paulson, who oversees a hedge fund that has roughly $33 billion in assets and ranks among the world's five biggest, staged a late-year recovery when early bets that the housing market would recover paid off.