The big loser regains the Midas touch

Hedge Fund

Every loser wins. Well, sometimes

Diligent readers of Bloomberg Businessweek will have noticed a pattern.

From their June 2012 cover labeling hedge fund manager John Paulson 'The Big Loser' to the July 2013 cover on 'The Hedge Fund Myth' to posts this week about hedge funds badly underperforming the broader market - the publication has been rather exhaustive in cataloging the asset class’s problems.

The magazine reports that it's time to give credit where it’s due, however. Paulson, who pocketed $4bn in 2007 on prescient subprime mortgage investments and then suffered horrible reversals in 2011, is having a pretty good 2013. His Advantage fund has gained 30% through November, and a fund betting on a U.S. economic recovery has gained 55%. The hedge fund industry overall has gained 7.1% in 2013, according to Bloomberg data.

Successes like Paulson’s serve to bolster the hedge fund mystique: that brilliant individuals can see where the market is going and deserve gigantic fees, often 2% of assets and 20% of gains, to take investors there.

To access the complete Bloomberg Businesweek article hit the link below:

Amid Awful Year for Hedge Funds, Paulson is Exception

Next Crisis Won't Be in Banking: BlackRock CEO Fink

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