The ups and downs of John Paulson's eponymous hedge fund,
Paulson & Co., are well-documented. Paulson rose to acclaim
for his prescient bets against sub-prime mortgage securities.
Paulson, who has not been known as the media's biggest fan,
was featured on the cover of the latest issue of the Bloomberg
Businessweek and was the subject of a wide-ranging interview. In
the interview, he spoke a bit about his firm's recent
Despite Paulson's legendary performance in 2008, his firm's
two largest funds, Paulson Advantage and Advantage Plus,
experienced dreadful 2011 performances. Paulson Advantage gave up
36 percent while Advantage Plus tumbled 52 percent
according to Businessweek
. However, Paulson & Co. did not become one of the largest
U.S. hedge funds by consistently losing clients' money.
For those that want to try their hands at outperforming
Paulson, here are some ETFs the man himself might like.
Market Vectors Gold Miners ETF (NYSE:
Paulson's bullish stance on gold is well-known. The SPDR Gold
) could also easily make this list because the fund was
also among his firm's holdings at the end of the
Gold miners have drawn favor from Paulson & Co. as the
firm held at least seven at the end of the first quarter,
including Barrick Gold (NYSE:
) and Gold Fields (NYSE:
). Overall, Paulson's first-quarter 13F filing indicates the
firm's gold miner stakes comprise roughly a third of GDX's
weight, making the ETF an ideal way for investors to mirror
Market Vectors Gaming ETF (NYSE:
Paulson held stakes in two casino stocks - MGM Resorts (NYSE:
) and Caesars Entertainment (NYSE:
) - at the end of the first quarter. MGM is a top-10 holding in
BJK, but Caesars has not made it into the ETF yet since returning
as a public company earlier this year. Particularly in the case
of Caesars, Paulson is betting on one of the more controversial
casino stock as the company has
$19 billion in debt, nearly quadruple the debt
load of Wynn Resorts (NASDAQ:
Investors might want to wait to see if BJK can find a floor in
the $30-$31 area before rushing into this fund, which has taken a
double-digit loss since the start of the second quarter.
iShares Dow Jones U.S. Oil & Gas Exploration &
Production Index Fund (NYSE:
Paulson did not hold a lot of energy stocks at the end of the
first quarter and the hedge fund eliminated its entire position
in Transocean (NYSE:
), the world's largest provider of offshore drilling services.
The firm did, however, hold a stake in Anadarko Petroleum (NYSE:
) at the end of Q1.
Anadarko, one of the largest U.S. independent oil and natural
gas producers, was Paulson & Co.'s seventh-largest holding,
according to Whale Wisdom. Investors might note two facts about
Paulson's Anadarko stake. First, Paulson &Co.'s Q1 13F filing
showed that the hedge fund significantly reduced its position in
the stock. Second, anyone that buys Anadarko at current levels
would be getting superior pricing to what Paulson got. The firm
added the stock in the first quarter of 2011 when it traded
around $80. Friday, it traded closer to $65. Anadarko is IEO's
third-largest holding with a weight of almost eight percent.
ProShares UltraShort Euro (NYSE:
Earlier this year, Paulson said in a letter to investors the euro
is "structurally flawed," and will eventually fall apart. He has
put client money where his mouth is by betting against European
sovereign debt and establishing a long position on credit default
swaps used to insure that debt against default.
Financial Select Sector SPDR (NYSE:
Paulson is known for shorting sub-prime mortgages, but he was
quick to embrace the financial services sector just as the
darkest clouds from the credit crisis appeared to have passed.
Wells Fargo (NYSE:
) and Bank of America (NYSE:
), which combine for over 13 percent of XLF's weight, are found
among Paulson's holdings.
For more ETFs John Paulson might enjoy, click
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