Mortgage-Shorting Billionaire John Paulson’s Hedge Fund Down Big This Year

Amid a broader outpouring of funds from the hedge fund industry this summer, famous mortgage-market short-seller John Paulson has racked up additional losses in one of his most difficult years on record, the Financial Times reports.

Paulson’s $9 billion Advantage Plus fund lost 4.3 percent in August, the FT says, “according to an investor.” The company’s $3 billion Recovery fund fell 9.1 percent on the month, widening its second-quarter loss of 13 percent. Bloomberg, meanwhile, pegs the Advantage Plus fund’s year-to-date losses at 11 percent.

The overall company, which manages $31 billion, has apparently made a bad bet that the U.S. economy would quickly recover from its slump. “Bullish positions in banks such as Citigroup and Bank of America, as well as bets designed to pay off an upswing in the US housing market, have soured as investors have reassessed their view of the US economy,” the FT reports.

Paulson & Co.’s Credit Opportunities fund, the one that shorted U.S. the subprime mortgage market and made Paulson a fortune, is down 1 percent for August.