It's no secret that hedge fund giant John Paulson has had a rough year so far. He took an absolute reaming on Sino-Forest, and his two largest funds are down 44% and 29% for the year, respectively. Maybe that's why his latest 13F (filed Monday) discloses what appears to be a massive year-end Hail Mary pass.
Paulson sold a staggering $2 billion worth of GLD, the gold. This move in and of itself is not entirely surprising. After all, gold has been a huge winner for him, one of the only bright spots for him this year really, and he's getting out at the high. You'll never go broke taking a profit.
So what did he do with the proceeds? He bought BAC.
Yeah, you read that right.
He bought BAC.
I'm often fascinated by the strategic thinking of hedge fund managers. Some of their unorthodox plays (Kyle Bass buying pallets of nickels) really lend to the mystique of the profession. But sometimes I think they're just throwing shit against the wall to see how much of it will stick.
Yes, I get that he sold GLD at the high and bought BAC at the low. But c'mon. There's a reason gold was at the high, and there's a laundry list of reasons why BAC is in the dumper.
To his credit, he dumped over 8 million shares of, so we can probably rule out a stroke. But I can't help wondering if Paulson is hoping BAC is good for a quick $1 pop to stem some of the bleeding by year end. Surely he can't be thinking long term, right?
The banking sector on the whole has been a miserable investment the past couple years, but B ofhave been absolute disasters. If not for a bullshit penny stock reverse split, Citi would probably be a buck a share today.
So what gives? Is Paulson just hoping for a quick pop? Or does he see something the rest of the market is missing? In spite of the terrible year he's having (or perhaps because of it), his redemptions are running lower than usual at this point in the year. But how much longer will investors stick around if he doesn't show them something soon? And really, I'm being serious here,? What the fuck is he thinking?