According to Casey Research,
``Not familiar with Paulson & Company, or founder John Paulson? You should be, and here’s why:
Picture from Businessinsider.com• Paulson’s bet on the subprime mortgage debacle earned $3.7 billion in 2007.
• The company made an estimated £606 million profit selling short British bank stocks in September 2008.
• John Paulson ranked #2 on Alpha’s Highest-Earning Hedge Fund Managers of 2008.
• Two of Paulson & Co.’s funds ranked #1 and #4 on Barron’s Top 100 Hedge Funds 2009 list."
So what has the top notch been loading up lately?
The answer is gold and gold mining stocks.
Again Casey Research, ``The privately owned hedge fund sponsor Paulson & Co. added over $3.7 billion in new gold positions during the first quarter of 2009, increasing its total investment to $4.3 billion. About 46% of the equity portfolio is now allocated towards gold and gold stocks."
Why?
Telegraph's Ambrose Pritchard thinks this has been due to reflation.
``The world's top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993...
``Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.
``Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a "Paulson Real Estate Recovery Fund", reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play."
On the contrary having 46% of one's portfolio in gold suggests that it isn't just a liquidity reflation play, since reflation suggests of an economic recovery which should translate to a more diversified portfolio.
Instead it does seem to look more like a "super" or "hyper" inflation play.
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