John Paulson Buys Mortgage Bonds as Hedge Fund Losses Widen

Bloomberg – Money manager John Paulson has started buying beaten-up mortgage bonds as hedge funds stumbled for a fifth straight month.

Paulson, 52, is purchasing debt backed by home loans after generating sixfold returns last year with help from bets against subprime mortgages, investors in his funds said. Paulson’s Advantage Plus fund rose 29 percent this year through October, while the Eurekahedge Hedge Fund Index, which tracks more than 2,000 funds that invest globally, dropped about 12 percent.

“Paulson’s timing is typically very good,” said Louis Gargour, chief investment officer of LNG Capital LLP, a London- based hedge fund that invests in distressed credit markets.

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