Wall Street is asking whether John Paulson, the New York hedge fund manager who took home a record-breaking $3.7bn (£2.4bn) in 2007 after betting on a calamity in the US housing market, has lost his midas touch, after a disappointing fundraising for his latest investment project.
Mr Paulson, pictured, has launched a new fund to buy gold and gold-related investments, which he believes could soar in value if inflation becomes a persistent problem in the coming decade, but reports say he has attracted just $90m to follow him. He has put in $250m of his own fortune as well, but the fund is so far considerably smaller than anticipated and has got off to a rocky start in investment performance, making future fundraising doubly difficult.
Mr Paulson set up his hedge fund company in 1994 and spent more than a decade as a middle-ranking fish in an increasingly crowded pond until, 18 months ago, he bet that the mortgage market was headed for disaster because millions of US homebuyers were signing up to loans they would not be able to afford. There would soon be a day of reckoning, he calculated, and the multibillion-dollar market for mortgage derivatives would collapse.
Paulson & Co funds began increasing their exposure to gold last year, buying stakes in miners and in an exchange-traded fund that invests in the metal. He launched a standalone gold fund on 1 January.
The Wall Street Journal reported that the fund is down 10 per cent since its launch. The gold price is down 15 per cent from its all-time high above $1,200 per troy ounce in December.Reuse content