John Paulson, the legendary hedge fund manager who made billions betting against sub-prime debt has just released his year end letter.
2010 was a banner year for the Paulson group of funds. For example, the best performer was the Paulson gold fund that was up 35%. All in all, Paulson's funds produced over $8.4 billion of gross gains.
Paulson noted that his focus is now on special situations such as restructured equities.
"As high yield bonds now trade at par and yields have plummeted, our focus has shifted to restructuring equities as the driver of future returns. While returns in our current-pay portfolio are still decent, we believe going forward the highest returns will be in restructured equities, mergers and acquisitions, and event arbitrage."
Paulson also seems to be relatively bullish about the U.S. economy that he sees normalizing in 2011.
"We have spent the last year-and-half making restructuring investments in high quality assets at deeply distressed prices to maximize gains in an economic recover. In total, we've invested over $20 billion in more than 40 different transactions. Now that these companies have repaired their capital structures, their equity offers substantial upside appreciation relative to downside risk as we move toward economic normalization. This is the part of the cycle where we want to have long event exposure and do not want to be under-invested.
www.fundmanagernews.com
Paulson_Co-Q4-2010 -
2010 was a banner year for the Paulson group of funds. For example, the best performer was the Paulson gold fund that was up 35%. All in all, Paulson's funds produced over $8.4 billion of gross gains.
Paulson noted that his focus is now on special situations such as restructured equities.
"As high yield bonds now trade at par and yields have plummeted, our focus has shifted to restructuring equities as the driver of future returns. While returns in our current-pay portfolio are still decent, we believe going forward the highest returns will be in restructured equities, mergers and acquisitions, and event arbitrage."
Paulson also seems to be relatively bullish about the U.S. economy that he sees normalizing in 2011.
"We have spent the last year-and-half making restructuring investments in high quality assets at deeply distressed prices to maximize gains in an economic recover. In total, we've invested over $20 billion in more than 40 different transactions. Now that these companies have repaired their capital structures, their equity offers substantial upside appreciation relative to downside risk as we move toward economic normalization. This is the part of the cycle where we want to have long event exposure and do not want to be under-invested.
www.fundmanagernews.com
Paulson_Co-Q4-2010 -
