With Paulson Down Nearly Double-Digits, Here Is How Other Hedge Funds Are Doing

John Paulson’s relentless slide into P&L mediocrity was on highlight today courtesy of an extended profile by the NYT, which reports on the hedge fund manager’s “fall from stardom”, and details his surprisingly poor performance. Here are the highlights:

Paulson & Company, has recorded nearly double-digit losses in several of its larger funds as of the end of March… Mr. Paulson’s struggles come after a gut-wrenching 2016, when he recorded even steeper losses in those funds, partly because of several wrong-footed bets on drug makers, including the troubled Valeant Pharmaceuticals. That followed a painful 2015, when investors first balked and began pulling their money from his firm.

“While we are disappointed in performance in 2016, we believe we have a path to a recovery,” Mr. Paulson told investors in one letter.

But it has not been smooth sailing. In another letter to investors of a merger arbitrage fund that declined by 49 percent last year, Mr. Paulson called 2016 “the most challenging year since inception.” In May, Mr. Paulson will address his investors at a meeting in London at Claridge’s Hotel in London.

[Paulson’s] his assets under management continue shrinking. Paulson & Company manages just under $10 billion today, down from $36 billion in 2011. Nearly two years ago, some Wall Street banks began to recommend that investors redeem some of their money from the firm.

In another letter to investors of a merger arbitrage fund that declined by 49 percent last year, Mr. Paulson called 2016 “the most challenging year since inception.”

2017 is shaping up as another rough one for Mr. Paulson. The Advantage fund was down 9.7 percent as of the end of March and the Partners Enhanced fund continues to sink — falling just over 8 percent after last year’s 49 percent plunge.

Observing what we wrote last April, NYT repeats that over the last three years, Paulson’s Advantage has consecutively recorded double-digit losses. That follows earlier losses of 36% in 2011, 14% 2012, a modest 26% gain 2013, according to an HSBC industry report and people with knowledge of the firm’s performance. The losses were amplified in the levered Advantage Plus fund.

While Paulson suffered huge losses last year due to several concentrated bets on just a handful of pharma companies – Valeant alone cost Paulson $2 billion – and then there was Shire, Allergan, Mylan and Teva, his losses extended beyond those four names, and in a more troubling development investors pulled substantial amount of capital from the fund. As Forbes wrote recently,  in addition to P&L losses, Paulson suffered at least $2.5 billion in redemptions in 2016. As a result, according to the NYT Paulson’s AUM has continued shrinking, and today Paulson & Company manages just under $10 billion, down from $36 billion in 2011. “Nearly two years ago, some Wall Street banks began to recommend that investors redeem some of their money from the firm.”

Still, don’t cry for John:

Even after several years of losing money for his investors, Mr. Paulson remains one of the richest men in the world — with a net worth of about $7.9 billion, according to Forbes. But, as the financial magazine recently noted, he is now $2 billion poorer.

So yeah, it’s been a bad year for Paulson, but how is everyone else doing? As it turns out, not that well either.

The following table using the latest HSBC data, breaks down the marquee hedge fund names’ performance YTD, and shows that merely beating the S&P500 continues to remain an elusive goal for nearly all of the “smart money” out there

Finally, courtesy of HSBC, here are the top 20 best and worst hedge funds through the last week of April.