John Paulson couldn’t think of anything worse than being under-invested in 2011.
He told investors in his year-end letter that the hedge fund will be on a massive market offensive in 2011.
We have spent the last year and half making restructuring investments in high quality assets at deeply distressed prices to maximise gains in an economic recovery.
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…
This is part of the cycle where we want to have long event exposure and do not want to be under-invested.
He then goes on to an investor pep talk, reassuring those who have been freaking out about the size of the hedge fund, and explaining that their stellar returns prove that the fund is clearly able to perform at current asset levels.
“It is the manager and team that affect performance, not the size of the fund or firm,” he says.