Dollar shares of the Recovery Fund, Paulson’s best- performing strategy this year, rose 6.6 percent in April and 22 percent in 2013, the person said. The fund gained because of its stakes in insurance and asset-management companies, the firm wrote in the letter, according to the person. The strategy had $1.7 billion in assets.
Paulson’s Credit Opportunities Fund, the firm’s largest strategy, with about $5.9 billion in assets, rose 1.3 percent in April and 12 percent this year, the person said. The fund rose because of investments in bank debt and defaulted, mortgage- backed and convertible securities, the firm wrote in the letter, according to the person.
Paulson Partners Enhanced, a merger-arbitrage fund, climbed 3 percent last month and 14 percent this year, the person said. The firm’s merger strategy had $5.3 billion.
Paulson, who made $15 billion for his investors in 2007 by betting against subprime mortgages before the housing collapse, is trying to rebound after wrong-way bets on a U.S. economic pickup in 2011 and a worsening European debt crisis, bullion and gold stocks in 2012. The firm’s merger strategy is the only one above its high-water mark, or previous peak value, the person said. Managers whose funds fall below the mark aren’t able to charge performance fees until they recoup losses.