John Paulson’s Paulson & Co looks to gain $550 Million from Lehman bet

July 6th, 2011
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Hedge fund, Paulson & Co., will likely reap a profit of at least $550 million on its investments in bonds issued by Lehman Brothers that dipped in value during Lehman’s unraveling. The Financial Times reports that Lehman’s estate has agreed to pay bondholders 21.1 cents on the dollar.

John Paulson’s Paulson & Co started buying Lehman bonds in September 2008 and acquired bonds with a total face value of $4 billion at an average cost of 7.3 cents. Other hedge funds, such as Fir Tree and Taconic that bought Lehman bonds at close to settlement value, did not fare as well.

Lehman bonds recently traded at close to 26 cents, significantly above their 21.1 cents settlement value, potentially giving Paulson & Co an even greater profit of $780 million. Paulson hasn’t been as lucky on some of its other recent investments such as Sino Forest where it lost $585 million or UK-based Premier Foods where shares dropped over 20 percent after the company issued a profit warning.
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Paulson & Co.
Related People: Andrew Hoine; John Paulson; Mena Gerowin*; Mike Barr; Sheru Chowdhry; Stuart Merzer
Related Entities: Paulson Advantage Master Ltd; Paulson Advantage Plus Master Ltd; Paulson Real Estate Recovery Fund; Paulson Recovery Fund; PCI
Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News; Top Hedge Fund Portfolio Reports

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