John Paulson, who became a billionaire by betting against U.S. mortgage markets, gained 12.4 percent with his main hedge fund in September to erase this year’s loss, said two people briefed on the performance.
Returns at New York-based Paulson & Co.’s Advantage Plus Fund, which uses strategies designed to profit from corporate events such as mergers or bankruptcies, improved as the Standard & Poor’s 500 Index posted its biggest rally for the month since World War II. Advantage Plus fell 4.3 percent in August before beating the S&P 500’s 8.8 percent increase last month.
Paulson’s Credit Opportunities Fund rose 3.9 percent in September, bringing its year-to-date return to 9.6 percent, according to the people, who asked not to be named because the information isn’t public. The Recovery Fund advanced 8.5 percent last month and 7.5 percent this year, while the Gold Fund jumped 5.7 percent in September and 22 percent this year.
Paulson & Co., which oversees about $31 billion, had bet on an economic recovery by 2012 before scaling back its bullish investments in securities earlier this year. Paulson, 54, said he believes the global recovery remains intact, and that he expects to make money in the next two years with the stocks of companies going through bankruptcies, restructurings and reorganizations.
Hedge funds probably recorded their highest return of the year in September, Credit Suisse Group AG said Oct. 4, as equities rallied the most for the month since 1939. The Credit Suisse Liquid Alternative Beta Index, which tries to replicate hedge funds’ returns, climbed 3.6 percent in September, the largest increase since a 3.1 percent gain in July, when the S&P 500 rose 6.9 percent.
Stocks worldwide have pared declines to a loss of about 3 percent from the 2010 high reached in mid-April. U.S. growth slowed to a 1.7 percent pace in the second quarter from 3.7 percent in the first quarter, according to revised data released Sept. 30.
Paulson’s September returns were reported by the Wall Street Journal on Oct. 4.