Published April 18, 2013
BOSTON – Hedge fund manager John Paulson's Advantage Fund is losing money again this month in the wake of a sharp selloff in gold, a source familiar with the numbers said on Thursday.
The billionaire investor plans to update his clients next week on how the portfolios are positioned, the source said. Paulson's Advantage Fund is up 1.3 percent for the year, lagging the average hedge fund.
The Advantage Fund, one of the $18 billion firm's best-known portfolios, has lost 2.4 percent in the first two weeks of April but is still up for the year,
One of the biggest investments is gold mining company Anglo Gold Ashanti, which has suffered big losses recently, the source said.
Paulson has long held firm to his view that inflation will eventually rebound, making gold a prudent hedge but in the wake of the yellow metal's dramatic selloff, Paulson has lost significant amounts of money.
Still he is sticking with his plan. "The recent decline in gold prices has not changed our intermediate to long-term thesis," Paulson partner John Reade said earlier this week.
A Paulson spokesman would not comment on the mid-month numbers for the Advantage fund.
Paulson's fund is not alone in holding fast to the notion that gold is still an asset to hold. In a daily research note this week, Ray Dalio's Bridgewater Associates wrote that while the magnitude of the selling in gold was surprising, much of it was driven by what the $141 billion hedge fund and investment firm described as selling by "weak" and leveraged hands. Bridgewater indicated it saw value in gold.
Investors in Paulson's funds will have a chance to hear how the funds are doing next week at an investor day when he is expected to speak about all investments, including gold.
(Reporting By Svea Herbst-Bayliss and Katya Wachtel; editing by Matthew Goldstein)