On a conference call with investors last month, billionaire John Paulson boasted that one of his biggest hedge funds would have been up 15 percent this year -- if only he hadn’t owned gold stocks.
The wishful computation of returns highlights the challenge for Paulson as he seeks to resurrect his reputation as a Wall Street icon and reverse $9.4 billion in losses for clients in the past two years. Paulson has done well investing in companies undergoing mergers or restructurings, a strategy where he got his start as trader. Yet his big bets on macroeconomic developments, such as his wager on gold, have undermined that performance.
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