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John Paulson Off to a Strong Start in 2011

February 14, 2011 | About:
John Paulson’s hedge funds are off to a strong start in 2011.

In 2010, Paulson racked up $5 billion in personal profits from his $35 billion hedge fund empire.

Thus far in 2011, it appears Paulson is on track to cash in with the sale of a group of bankrupt resorts that he owns.

“Government of Singapore Investment Corp., a sovereign-wealth fund, offered to buy a group of bankrupt resorts owned by hedge fund Paulson & Co. and other investors.

The fund has offered $1.5 billion for the five resorts, one of its lawyers, Michael Sage, said in an interview after unveiling the offer at a bankruptcy court hearing today in New York.

The resorts, including the Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and the Doral Golf Resort & Spa in Miami, filed for bankruptcy Feb. 1 after Paulson and other investors took ownership of them through a foreclosure, according to a court filing.” (Bloomberg)

Last month a lender group including Paulson & Co., gained control of former CNL Hotels & Resorts Inc. properties from Morgan Stanley’s real estate funds through a $600 million debt restructuring.

In his 2011 investor letter Paulson predicted that he would be active in restructuring 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 gained fame in 2007 for shorting sub-prime derivatives and banking $4 billion in profits. However, recently Paulson has made a number of bullish bets on real estate.

In September 2010, in a speech to a packed audience at New York's University Club, Paulson said,

“If you don’t own a home buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”


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