Paulson & Co. was hit with roughly $2 billion in redemptions at the end of June, an amount some investors found surprisingly low given its recent losses and lingering uncertainty about whether the firm might become embroiled in the Securities and Exchange Commission's charges against Goldman Sachs for the structuring of a failed mortgage product.
As of July 1, Paulson & Co.’s assets under management had fallen to $30.9 billion, down from $33.1 billion at the end of June and $32 billion on January 1. “The redemptions are lower than I would have personally expected,” said one fund of funds investor in the firm, who believes any redemptions were the result of investors’ fears that the SEC’s investigation could ultimately have a negative impact on the firm. Still, most of Paulson’s investors say they are prepared to sit tight.
“We’ve tried to stay away from the gossip and just stick to the facts,” said another institutional investor in the firm, noting that he is not planning to pull his investment anytime soon. “We’ve looked into the facts, and so far we’re comfortable with the fact pattern,” he said, commenting on the SEC’s case against Goldman. A spokesman for Paulson & Co. declined comment.
Paulson & Co.’s assets under management were also hit by June losses in several of its funds. Paulson Advantage Plus was down 6.85% in June, while Paulson Advantage Fund –the strategy’s unlevered counterpart –was down 4.4% for the month. Paulson International, an event arbitrage strategy, was down 3.3% in June, and the Paulson Recovery Fund was down 12.4% for the month.
“The losses were a bit of a surprise because he was flat and even up slightly, and then all of the sudden at the end of the month it didn’t end well,” said the fund of funds investor of the firm’s June losses. “I think he got hit with some credit markdowns and some stuff in financial as well.”
The Paulson Gold Fund, a portfolio of roughly $500 million in assets under management, was the firm’s one bright spot in June, ending the month up 7.3%.
—Britt Erica Tunick