To us what’s most impressive about hedge fund manager John Paulson is that after making an uber-bearish bet that made him billion, he successfully parried the changing winds and made profits on the way up. Other mega-bears stayed mega-bearish and have seen their reputations blown to smithereens.
But BusinessWeek has another view, arguing that the man who performed the greatest trade ever is now just average.
The founder of Paulson & Co. doesn’t even look average this year. His biggest portfolio, Advantage Fund, has returned 15% vs. 17% for peers. And while his major bets on gold and big banks are paying off, such holdings aren’t likely to produce the record gains that made him a rock star on Wall Street. “Paulson is quite capable of making money,” says Tammer Kamel, managing partner of Toronto’s Iluka Consulting Group, which advises clients on hedge funds. “But I don’t think he has some crystal ball that will enable him to make [huge gains] year after year.” A spokesman for Paulson declined to comment.
Ok, it’s probably mildly embarrassing that he’s lagging his peers for the year — marginally — though the critique that his gold and bank bets aren’t going to pay off like his bet against subprime is just absurd.
The article also lists several of his other plays, like Kraft, suggesting that it’s a boring bet that isn’t going to be lights-out.
But look, opportunities to short the biggest bubble of all time don’t come around that often. What’s impressive is knowing when it’s time to ease off the gas pedal, and not press for the next amazing win. That’s what should be lauded.
(via Gary Weiss)
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