John Paulson, who made a winning bet against sub-prime mortgages prior to the housing crisis, didn’t have much luck in 2014, which was the second worst year of his career, as reported by Bloomberg.
While the jury is still out on whether he is right that a house is the best investment, given very low interest rates, Paulson was on the wrong side of the energy move downward, a plummet that very few predicted. He also lost big on Fannie Mae and Freddie Mac. Paulson’s Advance Plus Fund, which is an event-driven fund that focuses on companies in transition, fell 36%. His predictions of mergers also failed to bear fruit.
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Hedge fund managers lost the case with the Federal government that Fannie Mae and Freddie Mac shareholders should be compensated. Not only did they lose the case, but Paulson lost out investing in the companies. His merger fund took a loss when Shire canceled its plans to buy AbbieVie.
The Street.com posits that Paulson could have a brighter 2015 than 2014 with bets on healthcare. Paulson, who has a Romanian Jewish mother, might know the notion of adding a name to change one’s mazal (badly translated as luck) and the fund now has a new name: The Paulson Special Situations Fund. The Street.com reports the one sector that performed well in Paulson’s portfolio was healthcare, with all 9 names giving decent returns (aside from the Shire/Abbievie merger disappointment). Paulson is not stung too much by his merger disappointment; he expects M&A activity to be strong this year.