The FINANCIAL — John Paulson, the billionaire hedge-fund manager having the worst year of his career, may have made a $439 million profit from the sale of his Delphi Automotive shares in Wednesday's initial public offering.
The average purchase price paid by investors such as Paulson, who converted debt to equity during Delphi's bankruptcy, was 67 cents a share, according to a filing with the US Securities and Exchange Commission. If Paulson paid the average cost and sold 20.6 million of his shares as intended at the $22 IPO price, he would have received $453 million on a $14 million investment.
The return would almost erase the $468 million June loss that New York-based Paulson & Co posted on Sino-Forest Corp, the Chinese forestry company accused by short-seller Carson Block of overstating timberland holdings. The hedge fund, previously the largest investor in the stock, sold its entire stake in June after Sino-Forest shares plunged 71 per cent in two days.
Paulson said this week he cut risk in all of his hedge funds after a year of losses in most of them and as the European sovereign-debt crisis roiled markets. He reduced the so-called net exposure in his biggest funds, Advantage Plus and Advantage, which have $11 billion in combined assets, to 30 per cent from 60 per cent about four months ago.The Advantage funds, which aim to profit from corporate events such as takeovers and bankruptcies, have declined 44 per cent and 29 per cent this year through October, respectively. Year-end withdrawal orders total about 8 per cent of the firm's $28 billion in assets, or about $2 billion.
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