I am assuming that John Paulson, one of the most well-known and successful hedge fund managers around, is not a reader of this blog. In a previous post, I questioned his strategy of buying land and expecting the real estate market to recover. If you’ve been following the data lately, you know that the real estate market continues to decline.
But John Paulson may have more pressing losses to deal with:
John Paulson, who holds a significant long position in gold and gold mining stocks, suffered a heavy hit to his portfolio when Sino-Forest (TRE.TSX) plummeted following accusations from Muddy Waters Research that the company overstated its timberland holdings in China’s Yunnan province.
Paulson’s Funds own 34,714,300 shares, or 14% of the outstanding of Sino-Forest. The stock remains halted after sinking 25% yesterday to C$14.46. Shares of Sino-Forest are indicated at C$6.75, off over 50% versus its previous close. The hit to Paulson would be in excess of $500 million.