Paulson Hedge Funds Said to Drop in September as Stocks Fellby and
Firm's merger fund slumps, erasing most of its 2015 gain
Paulson Advantage event-driven fund now down 12% this year
So much for a rebound at billionaire John Paulson’s hedge fund firm.
Paulson & Co.’s main merger fund, the firm’s largest strategy, fell 6 percent in September, cutting its 2015 gain to 0.6 percent, said a person briefed on the matter. Paulson’s Advantage hedge fund, which makes bets on companies undergoing events such as bankruptcies and spinoffs, lost 8.5 percent, leaving it down 12 percent this year, said the person, who asked not to be named because the information isn’t public.
Armel Leslie, a spokesman for New York-based Paulson with Peppercomm, declined to comment on the performance.
Some of the most recognizable hedge funds are struggling in a year when stocks have fallen modestly. David Einhorn’s Greenlight Capital dropped 17 percent this year through September. Larry Robbins’s main fund at Glenview Capital Management and Bill Ackman’s publicly traded fund at Pershing Square Capital Management both fell almost 13 percent. Fortress Investment Group LLC this week said it’s shutting its macro hedge fund, run by Michael Novogratz, after it lost more than 17 percent this year.
For Paulson, September’s losses in the merger fund, Paulson Partners, are eroding what had been a bright spot at the $19 billion firm, which seeks to recover from its second-worst year ever in 2014. Paulson Partners had gained almost 9 percent this year through July, before starting to lose money in August as volatility struck global markets.
Paulson’s four largest disclosed U.S. stock holdings at the end of the second quarter -- the most recent date for which such data are available -- were health-care companies. Allergan Plc, Valeant Pharmaceuticals International Inc., Shire Plc and Mylan NV all fell more than 10 percent in September, a month in which the S&P 500 Health Care Sector Index dropped 5.8 percent.
The Standard and Poor’s 500 Index of U.S. stocks declined 2.5 percent last month, with dividends reinvested, and is down 5.3 this year through September.
Hedge funds on average lost 0.6 percent last month, cutting their 2015 gains to 0.7 percent, according to data compiled by Bloomberg.