Paulson's biggest funds extend gains in Sept -source


By Svea Herbst-Bayliss

BOSTON, Oct 7 (Reuters) - Hedge fund manager John Paulson,known for huge gains followed by heavy losses in some of hisfunds, extended his portfolios' winning streak in September,leaving all of them with double-digit gains for the year, aperson familiar with the numbers said on Monday.

Bets on insurers, health care, real estate and hotels allhelped Paulson's biggest funds deliver some of the industry'sbest gains, according to the source, who is not permitted tospeak about the private funds publicly.

The average hedge fund is up about 4.5 percent this year,research firm Hedge Fund Research reported, while the Standard &Poor's 500 Index is up 18 percent after gaining 2.6 percent inSeptember.

Paulson told investors that his Recovery Fund gained 4.2percent in September and is up 37.8 percent for the year, whilethe Paulson Enhanced fund gained 3.1 percent and is up 25.6percent for the year, the source said.

Even his Advantage Funds, the firm's biggest beforesuffering heavy losses in 2011 and 2012, were up: The AdvantageFund gained 0.9 percent to be up 11 percent for the year, whilethe Advantage Plus Fund gained 1.2 percent and is up 15.8percent.

Paulson did not report how his gold fund, which suffereddouble-digit losses earlier in the year, is faring. Most of themoney left in the shrinking portfolio is Paulson's own.

Ever since earning $15 billion with a bet against thehousing market in 2007, Paulson's investment picks have beenclosely followed in the hedge fund industry.

Although Paulson had, for a time, a very pessimistic view onEurope and was shorting European sovereign bonds a year ago, heis now betting on Greece's recapitalized banking sector.


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