John Paulson loses 31% in its main fund, Advantage Plus Fund

Since the beginning of the year, its flagship fund Advantage Plus Fund, which tries to take advantage of special situations related to businesses, such as takeovers and bankruptcies, is down more than 31% according to a person familiar with the structure.

John Paulson, 55, has reduced its bullish bets after losses this year and warned its customers in June that it has reduced its stake in Bank of America Corp., where he was the ninth largest shareholder with nearly 124 million shares at March 31, 2011. The shares of the bank tumbled 47 percent since then. More generally, financial firms have shaken the Paulson fund, among the Top 10 of shares held at the end of the first quarter, the half was made up of companies in financial services. Citigroup Inc., the third largest line, dropped 37 percent since the beginning of the year. Hartford Financial Services Group Inc., the sixth largest participation fell by 28 percent and SunTrust Banks Inc., the eighth largest participation fell by 37 percent.

With this poor performance, Paulson will perform about 45 percent the rest of the year to provide a positive return on the Advantage Plus Fund. he is thus forced to take significant bets and being right.

Last year, after poor performance on the first three quarters, Paulson had ended the year with a strong performance, and financial stocks had greatly contributed to the rise of more than 17percent of its fund at the end of the year , after being down 11 percent at the end of August2010.The gossips were wondering if he will be saved this year, regarding a QEIII in preparation, as he has been saved by the FED QEII.

To reassure investors and bring confidence, Paulson sent them a note last week telling them that the amount of redemption requests on the Advantage Plus Fund, which had $ 15.7 Billion of assets at August 4, were lower than the amounts required by customers a year earlier, as well as quarterly redemptions for the past two years.

In all cases, the redemptions would not shake the Advantage Plus Fund in which Paulson and his employees account for 36 percent of the assets.