John Paulson told investors he is shorting European sovereign bonds, according to an investor in a Paulson hedge fund.
Paulson said during a call with investors that he is also buying credit-default swaps on European debt, or protection against the chance of default. Spanish banks are of particular concern as their holdings of the country??s debt and client withdrawals make them overly dependent on European Central Bank financing, Paulson told investors. In February, he said that the euro is ??structurally flawed,? and will eventually fall apart, according to a letter sent to investors.
Paulson also told investors during the call that he took a portion of his own money out of the $6.8bn Credit Opportunities Fund and put it into the $1.2bn Gold Fund, which can buy derivatives and other gold- related investments, and the $8.3bn Advantage funds, which seek to profit from corporate events such as takeovers and bankruptcies
Paulson, who manages about $24bn in his New York- based firm Paulson & Co., lost 51 percent in one of his largest hedge funds last year.
