John Paulson’s Year a Little Worse After Poor December Returns

John Paulson just can’t seem to catch a break lately.

He overcorrected his positions in October after reporting year-to-date losses of 47% through the end of September, missing out on the October rally. Then, there was Paulson’s gold investments.

When gold miners didn’t perform as well as bullion, investors and hedge fund managers like Paulson were caught out.

Maybe Paulson is just a little early out the gate and hedge fund manager David Einhorn is right when he says that “the [gold] mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further,” but that doesn’t help the fact that, right now, Paulson’s gold fund was down over 6.5% year-to-date throughteh middle of December – it was Paulson’s one bright spot.

Paulson really is a great hedge fund manager. His performance is down lately but the man knows his stuff. His Advantage Plus Fund, which is his worst performing fund this year, has returned 142% since 2007. That fund returned 38% in 2008, the same year the average equity fund lost roughly 20%. It went on to return 21% in 2009 and 17% in 2008. Then, there was 2011.

Paulson’s Advantage Plus fund was down 52% as of December 16 and, given the market, will likely end the year down at least 50%. Reuters reports Paulson’s Advantage fund fell 6% in the first two weeks of December, bringing its year-to-date losses to -36%.

John Paulson will catch a break eventually. Until then, the vast majority of his clients are staying put – Paulson “had received gross redemption requests totaling less than 8 percent of the firm’s assets under management.”

In any case, this is one year Paulson will be happy to put to rest.