Friday, January 28, 2011

"Big Short" Paulson Continues to Be "Big Long"

Back in May, I featured a CNBC report about John Paulson going from "Big Short" to "Big Long":

"John Paulson, the hedge fund manager who reaped billions from the infamous ‘Big Short” against the subprime housing market and the American financial system, is now increasing his bet on their recovery, according to recent filings."

Today's WSJ reports on its front page today that:

"Hedge-fund manager John Paulson personally netted more than $5 billion in profits in 2010—likely the largest one-year haul in investing history, trumping the nearly $4 billion he made with his "short" bets against subprime mortgages in 2007."

"John Paulson, head of hedge-fund giant Paulson & Co., turned bullish on the U.S. housing market in early 2010. Now he’s got a fund that’s betting on a rebound. One of the firm’s latest projects has taken it into the Sonoran Desert in the American Southwest, in search of empty residential-development lots. In November, the firm finished raising capital for the Paulson Real Estate Recovery Fund, gathering roughly $315 million in commitments from investors. 

One of the fund’s main strategies is to buy undeveloped tracts of land that already have environmental and building permits. Roads, sewers and electricity may also be in place, but not homes, according to one of the people familiar with the fund.  If the real-estate market recovers enough for developers to start building more new houses, this may be the type of land they buy first. That’s because a lot of the costly, time-consuming preparation work already has been done, the person explained." 

HT: Mike LaFaive

7 Comments:

At 1/28/2011 1:55 PM, Blogger morganovich said...

it's also the kind of land that you can hold for a decade at low cost as opposed to houses that need upkeep etc.

i think he may be making a pretty long term bet here.

 
At 1/28/2011 3:15 PM, Blogger Che is dead said...

Maybe, but the "big shorts" are busy palcing other bets.

 
At 1/28/2011 3:26 PM, Blogger Che is dead said...

After more than 1 trillion dollars in "stimulus" spending and several trillion in quantitative easing it's not surprising to see economic growth. What is surprising - at least to the Keynesians - is just how anemic that growth has been. What happens when the spigot is turned off?

 
At 1/28/2011 3:58 PM, Blogger Buddy R Pacifico said...

What prominent former Paulson associate wants more regulation of hedge funds to force transparancy? Goldman Sachs!

 
At 1/28/2011 4:40 PM, Blogger Che is dead said...

"John Paulson, head of hedge-fund giant Paulson & Co., turned bullish on the U.S. housing market in early 2010. Now he’s got a fund that’s betting on a rebound. One of the firm’s latest projects has taken it into the Sonoran Desert in the American Southwest, in search of empty residential-development lots.

Forget the search for "empty residential-development lots", what about plain old empty houses?

A Frightening Satellite Tour Of America's Foreclosure Wastelands

 
At 1/28/2011 7:22 PM, Blogger Benjamin said...

I thin Paulson has it about right, 2011 will be a great year.

Lots of growth, low inflation, What's not to like?

Get used to QE--we may be at zero bound for years, thanks to low inflation, and a glut of capital. The role of government will change form fiscal stimulus to monetary stimulus--with the wonderful result of deleveraging.

If you think zero inflation, or minor deflation is fine, then check out Japan. They are in perma-recession, deflation, declining asset values, and people are not having babies anymore.

The monetary noose is choking them to death. But bondholders have been appeased. A slow death.

 
At 1/29/2011 11:00 AM, Blogger juandos said...

Comstock Partners isn't 'big' on long: In-Depth Look - Outstanding Debt Soars - Bloomberg

 

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