John Paulson is telling investors that he plans to reduce leverage in Advantage Plus and nix fees on further investments in his funds ahead of a redemption deadline on October 31.
Paulson also said that he has plenty of liquidity to meet redemptions — of which he says there might be a lot, up to 25% of the fund’s assets in the worst case scenario. There was some question about how easy it would be for Paulson to sell some of his assets because trading “vultures” were already starting to circle his holdings in anticipation of some sales.
Sounds like that’s not an issue. Neither is his continuing to run Paulson Advantage and Advantage Plus, the two funds with the biggest losses. He said on a call that he is 100% committed to running the funds.
The first of the things he told investors signals that Paulson hopes to retain investors by reducing leverage (which is currently amplifying his losses). The second might be Paulson’s eliminating any “shot-gun” reaction redemptions that might have occurred because investors follow others.
Nixing fees until he regains losses also helps to retain investors of course.
CNBC just tweeted, “Paulson Reducing Leverage In His Main Hedge Fund From 1.5 Times To 1.15- Paulson Says He Has Liquidity To Meet All Redemption Requests- WSJ”