2009-05-20seekingalpha.com

The second hedge fund in our series is Paulson & Co. run by John Paulson. His hedge fund has generated massive returns over the past two years, as he bet against financials and all things subprime.

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The first major move that everyone will be talking about is Paulson's big entrance into gold. The fund's position in the Gold Trust (GLD) is brand new and is brought up to a whopping 30% of its portfolio. Now, there are indeed a few caveats with this move: Paulson & Co has said that it has done so as a hedge, as it now owns well over 8% of this exchange traded fund (ETF). Its hedge funds have a share class that is denominated in gold (instead of in US dollars or Euros). Still though, that's quite a large hedge to have.

Paulson also has a copious amount of gold miners now littered throughout its equity portfolio. Previously, we had posted up when it started its large stake in Anglogold Ashanti. Now though, the fund has boosted its stake in Kinross Gold (KGC) and it has also started new positions in Gold Fields (GFI) and the Gold Miner ETF (GDX). Gold is clearly the name of the game for Paulson at present. And, such a massive position in gold and gold miners has to be for more than merely a hedge.


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