“A humbled John Paulson told investors on Thursday he was “too aggressive” with some of the stock bets in his flagship funds and he is trimming back some of his riskiest holdings.
The hedge fund manager told clients in a conference call that he was dialing back the risk by moving away from bank holdings with heavy mortgage exposure.
The investor call came after a tumultuous first half of the year for Paulson, whose flagship Paulson Advantage fund lost about 12 percent. A related fund called Advantage Plus was off 18 percent.” See: Paulson: our bets were too aggressive..
Paulson is learning what all good money managers have to learn eventually. Getting a couple of big aggressive bets right is great when it works , but when it loses money your unit holders want out. Welcome to the challenge of managing other people’s money, John.
This is one of the most crazy, volatile cycles ever in history. Government intervention has mucked about so much with normal market forces the past couple of years that we are working in the midst of manic price movements that have hurt most long and short players year to date leading hedge funds to suffer losses, pare back risk and step aside. See Soros’s Quantum at 75% Cash leads hedge funds reducing risk:
Even billionaire George Soros, who made $1 billion betting against the British pound in 1992, is perplexed.
“I find the current situation much more baffling and much less predictable than I did at the time of the height of the financial crisis,” Soros, 80, said in April at a conference at Bretton Woods organized by his Institute for New Economic Thinking. “The markets are inherently unstable. There is no immediate collapse, nor no immediate solution.”