Paulson & Co’s John Paulson is one billionaire who would love to forget the past two years, which have turned out to be his worst as wrong energy stock bets turned out to be sour. Bloomberg TV’s, Trish Regan, reports that failed mergers and investments in Fannie Mae and Freddie Mac continued to mount more pressure on the billionaire investor. Betting Big on Whiting Petroleum Corp (NYSE:WLL) also turned out to be disastrous at the back of sickening drop in oil prices.
Worst trading year of his career in 2014, three things seemed to blame here. You’ve’ got a wrong way bet in energy; a failed merger and investments in Fannie Mae and Freddie Mac. Paulson Advantage Plus fund plummeted 36% last year,” said Mrs. Regan.
Bloomberg’s Lisa Abramowicz believes the era of hedge fund managers making big bets on investments is over as central banks continue to control everything in the market. Paulson investment in the energy sector turned out to be completely sour seen by exploration and production firm Whiting Petroleum Corp (NYSE:WLL) plummeting by 64% from peaks achieved in August.
Paulson Partners fund, which invests in companies undergoing mergers, was one of the investments that performed slightly better, having soared by 0.8%, despite plummeting by 0.3% in December. The fund was hurt by the break up of AbbVie Inc. (NYSE:ABBV)’s plans to acquire Shire PLC (ADR) (NASDAQ:SHPG). Shire was the largest equity position in Paulson’s equity portfolio at the end of September, the stake amassing 9.73% of the total portfolio value. In addition, Paulson’s Recovery Fund that changed its name from Special Situation Fund also closed the year on a low having plummeted in December by 4.8% to close the year on a low of 18%.
Paulson might have enjoyed success during the peaks of recession in 2007 according to Alex Sherman, but a change in strategy in the way he invests might be the reason behind the recent turmoil.
“Over the years Paulson has sought of dipped his toes into different funds, different bets so you are no longer potentially investing only in one big bet. If you decide to invest in all of Paulson’s funds you are investing in a number of different things may be they are not all his sweet spots,” said Mr. Sherman.
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