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John Paulson — the famous hedge fund manager who made a fortune during the downturn, but who’s been getting crushed in recent years — blamed Europe for his fund’s bad performance in 2012.Kelly Bit of Bloomberg reports:
John Paulson, manager of $20 billion in hedge funds, told investors that the bulk of his losses this year came on bets that the European sovereign-debt crisis would worsen, according to a person familiar with the matter.
Paulson, speaking to clients at his firm’s annual meeting yesterday in New York, said he has reduced those positions following European Central Bank President Mario Draghi’s comments in July that the ECB was committed to preserving the euro, said the person, who asked not to be identified because the meeting was private.
In the last two years, Paulson has taken big, directional bets that have been exactly wrong.
In 2011, he bet on an aggressive economic rebound, with a focus on banks. His fund lost half of its value.
This year he’s down another 17%.
The European comeback has been the huge story of the year, and if anything it’s been underhyped.
Sovereign yields for the “PIIGS” countries have been collapsing. Italy’s borrowing costs are at a 2-year low. All of the big stock indices rallied. Greece has been given a new lease on life.