BOSTON, March 7 (Reuters) - Hedge fund billionaire John Paulson’s Gold Fund tumbled 18 percent last month when gold and gold mining stocks slid further, two people familiar with the numbers said.
Paulson’s Gold Fund has roughly $800 million in assets and ranks as the smallest portfolio within the New York-based firm’s lineup, but thanks to a steady decline in gold prices its large losses have been grabbing headlines for months.
Launched in 2010, the gold fund has lost 26 percent in the first two months of 2013.
Roughly 70 percent of Paulson & Co’s $18 billion in assets are invested in funds pursuing his credit, merger and recovery strategies. Those funds eked out small gains last month and are faring better.
The firm’s biggest success this year has been its merger-arbitrage oriented Paulson Partners Enhanced fund, which is up 7.7 percent after having extended January’s strong gains with a 1.1 increase last month.
Investors have long paid close attention to John Paulson’s bets after he earned billions by betting against the overheated housing market in 2007. But 2011 and 2012 have been tough years for the publicity-shy fund manager when a number of missteps including being too optimistic about economic recovery cost him billions in assets. The firm now oversees about $18 billion, down from about $38 billion two years ago.
Despite the sharp decline in gold prices, Paulson is sticking with his thesis that inflation will pick up at some point in the future when the metal can be a hedge.
Returns at Paulson’s other funds were mixed last month with his credit, merger and recovery oriented portfolios posting small gains while his Advantage funds suffered fresh losses.
Paulson Credit Opportunities inched up 1.4 percent last month and is up 4.4 percent year to date. The Recovery fund is up 5.3 percent for the year after climbing 1.5 percent in February.
The Paulson Advantage Fund, which bets on big corporate events like acquisitions and bankruptcies, dipped 3.5 percent last month and is off 2.6 percent for the year.