John Paulson’s Funds Take Big Hit

Gold bull John Paulson’s funds aren’t doing so well. This is news:

Mr. Paulson saw his fund dedicated to gold investments lose 16.4% in September, according to investors. That is worse than the 11% fall for gold prices. The Paulson gold fund now sports a gain of just over 1% in 2011, through September, compared with a 16% year-to-date gain in gold—a difference likely attributable to the fund’s investment in gold-mining companies, whose shares haven’t kept pace with gold’s rise. …

The gold-denominated versions of these funds, which had been up for most of the year, now are down about 20%. 

Mr. Paulson’s Recovery fund, which wagers on investments deemed likely to do well as the U.S. economy improves, lost more than 14% in September and is down 31% in 2011 …

The firm’s Paulson Advantage fund dropped 12.1%, leaving it down more than 32% this year. The Paulson Advantage Plus, which applies a layer of borrowed money to the firm’s investments, tumbled 19.4% last month. That fund is down nearly 47% on the year …

Paulson’s funds have experienced $8 billion of withdrawals, taking them down to $30 billion. Paulson personally, along with his executives, own about one-half of the funds’ assets.

Mr. Paulson has clung to an optimistic view on the U.S. economy [for 2012] …

Many of these big investors (David Einhorn, Paul Tudor Jones) bought “late” (2009) and “overbought” the market; my guess is that they are “in” at around $1,100—$1,200 and up. I see them more as speculators rather than “believers.”

As I wrote before, Mr. Paulson needs to go “Austrian” and read the Daily Capitalist. He would be ahead in gold right now.