Most hedge funds gain but Paulson loses again

BOSTON, March 7 Wed Mar 7, 2012 4:32pm EST

BOSTON, March 7 (Reuters) - Most hedge funds had good news for their investors last month but not John Paulson, who told clients that one of his biggest portfolios lost money, again.

The HFRI Fund Weighted Composite Index climbed 2.14 percent in February and is now up 4.95 percent for the year, Hedge Fund Research reported on Wednesday.

As one of the $2 trillion hedge fund industry's most closely watched barometers of success, the HFRI index shows that most strategies are making money this year thanks to rallying stock markets fueled by hopes for stronger growth and a solution to Europe's debt problems. The HFRI Equity Hedge Index climbed 6.9 percent in the first two months of the year.

Even though hedge fund returns have trailed the broader Standard & Poor's 500 in both January and February, their gains so far this year still mark the strongest start to a calendar year for the industry since 2000, HFR said.

But the good news is far from universal. New York-based Paulson & Co, which oversees about $23 billion in assets, told his clients that his Advantage Plus Fund dipped 1.5 percent last month while the closely related Advantage Fund was off 0.8 percent in February, investors familiar with the returns said.

For Paulson, one of the industry's most closely watched managers, this marks another embarrassment coming on the heels of a 52 percent loss at the portfolio in 2011. Paulson did begin the year with gains and despite February's loss the Advantage Plus fund is still up 3.5 percent this year.

Last year stands in stark contrast to 2007 when a savvy bet against the subprime industry which netted his firm triple digit gains and him a record payout of more than $3 billion.

The Standard & Poor's 500 is up 7.2 percent through early March.

Some other prominent fund managers have fared well, however, with David Einhorn's Greenlight Capital climbing 6 percent in the first two months, for example.

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