John Paulson may have been holding his breath October 31. For hedge fund managers, Halloween is also “redemption day.” It is the last day of the year that hedge fund investors have to notify hedge fund managers that they plan to pull their investments before the new year. Given the turbulent markets and the lackluster returns experienced across the board, many hedge funds when vulnerable to investor decisions about whether to cash out.
John Paulson’s Clients Pull Less Than 8%
John Paulson’s hedge fund “had received gross redemption requests totaling less than 8 percent of the firm’s assets under management,” reports Reuters. “A quick calculation suggests that Paulson, who most recently oversaw $30 billion in assets, would have to return roughly $2.4 billion to investors who have asked for their money back by the year’s end.” Paulson’s Advantage Plus fund lost 47% in the first nine months of the year. Since that report, Paulson has been surrounded by speculation that he could get a record number of redemptions, but it seems his clients are confident with Paulson at the helm. In the words of Reuters, “News of the number puts to rest heavy speculation about Paulson’s ability to hold onto money during bad times.”
John Paulson Looks to the Future
John Paulson actually had cause to celebrate. According to Reuters, “In a letter sent to clients, Paulson said this number was well below what is typically seen during the year end cycle.” Paulson noted that the redemption figures are gross. Net redemptions will take a few days to calculate. Reuters noted, “despite the heavy losses this year, Paulson, whose triple-digit returns in 2007 sparked a loyal following, might have actually attracted new money. Several weeks ago, the fund manager said he would not charge performance fees on new money until he made up his losses.” Paulson , who admitted he may have been too bullish about the markets, also announced that he hired economist Martin Feldstein, a professor at Harvard and rumored candidate for the Nobel Prize in economics, to join the Pauson & Co advisory board.