Aug 28 Hedge fund manager John Paulson, whose
biggest funds are posting double digit losses for the second
year in a row, reiterated in a conference call on Tuesday that
his bets on gold will pay off while also acknowledging that
current returns are disappointing, two people who listened to
the call said.
Paulson, one of the industry's biggest managers with roughly
$20 billion under management, spoke on a conference call with
Bank of America financial advisors and their wealthy clients
late on Tuesday. The call, which had been scheduled for some
time, gave investors a chance to speak directly with Paulson who
has notched some of the industry's biggest gains as well as some
As Paulson's biggest funds -- the Advantage and Advantage
Plus portfolios -- are off again this year after having lost 36
percent and 50 percent respectively in 2011, some big investors
have expressed concern about Paulson's abilities. Last week
Citigroup's private bank announced plans to stop investing with
him, dealing a blow to Paulson & Co, which has long been a
favorite with wealth managers and pension funds alike.
But Bank of America, which hosted Tuesday's call, gave the
manager a big vote of confidence and there have been no
indications that other big private wealth managers like UBS are
likely to have a change of heart about recommending the 56-year
Bank of America declined to comment on details of the call.
While Paulson expressed disappointment with Citi's decision,
Bank of America's private bankers said they are sticking with
him. Spencer Boggess, chief investment officer for alternative
investments hosted the call and praised Paulson's long record of
strong returns, and the firm's strong research abilities,
particularly its work on gold.
Paulson has long been bullish on gold as well as gold miners
and discussed them on the call, noting that his portfolios are
structured not to depend on specific economic conditions in
order to flourish.
Paulson said that redemption notices, where clients formally
ask for their money back, have been running at historical
averages so far this year.
Citi's divestment will withdraw some $410 million from
Paulson's assets under management, which peaked at $36 billion
Paulson shot to fame in 2007 when his long-term bets against
subprime mortgages paid off, earning investors in his Advantage
Plus fund a 163 percent return and himself the industry's
biggest-ever payday of $5 billion.
But two years later when he began betting that the U.S.
economy would rebound, his timing appeared to be off. At the end
of last year, after Bank of America's falling stock price had
dealt a heavy blow to his portfolios, Paulson called it quits
and sold out. He missed a rebound in the sector early in 2012.