(Bloomberg News) John Paulson lost 11 percent in his biggest fund in June, according to an investor, as the firm sold off Sino-Forest Corp. after a short-seller's allegations.

The drop left Paulson's Advantage Plus Fund, which uses strategies designed to profit from corporate events such as takeovers and bankruptcies, down 18 percent this year, said the client, who asked not to be named because the information is private. The fund's gold-denominated share class declined 11 percent in June and 12 percent in 2011.

Paulson & Co., which manages $37 billion overall, posted declines across all of its strategies in June, as the firm sold its shares of Sino-Forest, the Chinese forestry company accused of overstating timberland holdings and production in the Yunnan province, at a C$462 million ($482 million) loss since May 31, and global stocks and gold fell.

Paulson, 55, has been betting on an economic recovery by 2012. He lost 11 percent last year through August with his $9 billion flagship fund before performance picked up and returns turned positive as of mid-December. The fund declined 4.4 percent in March to erase this year's early gains, was little changed in April and slumped 6 percent in May.

Sino-Forest, which the New York-based firm held in its Advantage funds, has plunged about 73 percent from its closing price on June 1, the day before Carson Block's Muddy Waters LLC issued its report targeting the stock. Paulson & Co. sold the entire stake in Sino-Forest, which is based in Hong Kong and Mississauga, Ontario, as of June 17.

Armel Leslie, a spokesman for Paulson, declined to comment.

Recovery Fund

Paulson's dollar-denominated Advantage Fund, which employs a similar strategy to Advantage Plus, dropped 7.3 percent last month and 12 percent this year. The gold share class lost 8.1 percent in June and declined 7 percent in 2011.

Investors can choose between dollar- and gold-denominated versions for most of Paulson & Co.'s funds.

The Recovery Fund, which invests in assets Paulson believes will benefit from a long-term economic recovery, declined 3.6 percent last month and increased 1.2 percent this year. Its gold share class lost 5.2 percent in June and gained 3.4 percent this year.

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