John Paulson Is Now Down Almost 40%

john paulson

John Paulson is now down 38.7% YTD in his Advantage Plus fund, according to the Wall Street Journal.

The losses in his funds have been getting worse all year. He’s down 21.7% in August alone In Advantage Plus.

And in Paulson Partners he’s down 14.4% in August, down 11.8% for the year, according to the Wall Street Journal.

This morning came worse news. He lost millions by selling his stake in Bank of America at a loss last quarter, before Warren Buffett’s announcement this morning that he would invest $5 billion in the company.

Berkshire Hathaway said this morning that it would purchase 50,000 preferred shares for $5 billion pushing BofA’s stock price nearly 20% higher in early trading.

He dumped more than 63 million of Paulson & Co’s shares in Bank of America compared to the previous quarter, the latest 13F filing showed. Paulson is now the 23rd largest shareholder in BofA. He used to be in the top 10.

Assuming Paulson owns at least as many shares as his fund did on June 30th, when he filed his latest holdings with the SEC, he’s made over $100 million in the hours after Buffett’s announcement. 

But he could have made more. He owned nearly 124 million shares as of the end of the first quarter. 

Yesterday Bank of America closed at $6.99 a share. Today the stock has been trading between a low of $7.77 and a high of $8.80.  If we take the current price of $7.82, here’s what possibly happened:

He made: ~$50.4 million

But he could have made: ~$102.61 million

The difference: ~$52.21 million

Paulson’s hedge fund had 60,444,779 shares as of June 30, the filing said. 

While Bank of America’s stock price is down considerably this year, this move by Buffett arguably could help restore confidence in the bank and send the bank’s share price much higher in the coming months.

In September 2008, Warren Buffett made a similar move with his $5 billion investment in Goldman Sachs during the financial crisis.  That move helped restore confidence in the bank and the share price climbed up significantly over time.