Paulson loses on Barclays short position
PROMINENT hedge fund manager John Paulson has abandoned his fund’s short position on Barclays, losing an estimated £100m in the process.
The loss will be particularly keenly felt because New York-based fund Paulson closed its position just a day before Abu Dhabi’s International Petroleum Investment Corporation opted to offload 1.3bn shares in Barclays, pushing the bank’s share price down five per cent.
Paulson reduced its short position in the bank from 1.17 per cent to below 0.25 per cent – the threshold at which it must be disclosed – on 2 June, according to a filing with the London Stock Exchange.
The hedge fund had been shorting Barclays since September of last year, at one stage bagging a £6.3m paper profit in just a few hours as the bank’s share price fell by four per cent on the morning of 18 November.
Paulson is thought to have lost £100m by holding its short position from November until now as Barclays shares have rocketed more than fivefold since they hit a low of 51p in January. The precise loss is not known because it has not been disclosed whether Paulson has exited the position entirely.
Paulson is still one of the world’s top hedge fund performers, largely on the back of last year’s bets against sub-prime mortgage-backed securities and UK financials such as Royal Bank of Scotland.