Here’s how you know things are bad.
John Paulson is going to pay his employees out of his own pocket, says CNBC. Not only that, but he’s moving his fund’s high-water mark to zero for 2012. That means his fund need only stay in the black for his employees to collect bonuses based on this year’s returns.
In case you don’t remember, Paulson’s been getting smoked for the last couple of years. Last year his flagship fund, Advantage Plus, was down 53%.
CNBC called around the Street to see if anyone could remember a hedge funder taking measures like this before (probably to keep talent at their fund), and no one could.
Paulson’s spokesman had no comment.