Paulson saw fourth-quarter redemptions of about $2 billion across all his portfolios. He and his employees account for about half of the firm's capital, two people familiar with the matter said in October.
In his Jan. 5 letter, Paulson said that he would continue to keep all of his money in the fund other than what he needs to take out to pay taxes and personal expenditures.
Hedge funds lost 4.6 percent last year through November, according to Hedge Fund Research. The industry's largest drawdown started in October 2007, when managers were down 21.4 percent from the industry's peak asset value over the following 16 months, according to the research firm's data. Funds took three years to return to their high watermark, the Chicago-based firm said.
Some managers had to shut their hedge funds after incurring steep losses. Nick Maounis, who ran Amaranth Advisors LLC, closed his firm after losing more than $6 billion, or 65 percent, in 2006. Jeffrey Gendell, who runs Tontine Associates LLC in Greenwich, Connecticut, shuttered his funds after losing almost 92 percent in 2008.