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The
firm's flagship Paulson Partners portfolio dropped 4.2 percent,
trimming its year-to-date gain to 6.52 percent. The Paulson
Advantage Fund, once a favorite with wealthy individual
investors, meanwhile, lost 4.9 percent and is now down 3.6
percent for the year. The Special Situations Fund posted the
firm's biggest losses with a drop of 8.35 percent in August and
a 11.6 percent decline so far in 2015.
Paulson's August losses are in line with the broader market's
decline and hits taken by other big hedge funds. But investors
said the losses are especially painful for the $20 billion firm
because they largely wipe away a strong start to the year and
the chance of rebounding from a tough 2014.
The fund manager did not give an explanation for the losses, but
big bets on healthcare stocks, including Shire and Valeant,
weighed on returns when these names and others were battered in
August.
Fears about slower growth in China, uncertainty over an expected
U.S. interest rate increase and falling oil prices all
contributed to August's rout, which hurt many big-name fund
managers, including Nelson Peltz, Larry Robbins, David Einhorn,
and William Ackman.
Paulson, who is among the hedge fund industry's best-paid
investors, is known for patiently sticking with his bets, such
as the one he placed against an overheated housing market in
2007 and those made on gold a few years later.
More recently Paulson has bet that Puerto Rico, mired in a debt
crisis, will recover and attract fresh visitors to its beaches
and hotels. He plans to refurbish the bankrupt San Juan Beach
Hotel in Condado and holds other tourism properties on the
island.
Paulson offers a large number of portfolios and is planning to
roll out more later this year, but two big banks, Bank of
America and UBS, in July closed down some options for wealthy
clients to access his Advantage fund because of concerns about
performance.
Still there are plenty of institutional investors sticking with
Paulson. "August doesn't look so good, but he's still our
biggest winner for the year," one institutional investor said.
Paulson's credit fund dropped 2.3 percent last month and is off
2.6 percent year to date.
(Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis
and Steve Orlofsky)
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