John Paulson Just Had A Terrible Day As Sino Forest Falls 60%

ZeroHedge

this afternoon that John Paulson's mammoth hedge fund Paulson & Co. is the largest shareholder in Sino Forest (TRE.TO), which lost more than 20% on Thursday after Muddy Waters Research

on the company accusing it of fraud. The stock was halted on the Toronto stock exchange down 20%, but Sino Forest equity that trades in the U.S. on the pink sheets closed more than 60% lower. Muddy Waters has gained a massive following after uncovering fraud at numerous Chinese companies, including RINO International and China Media Express. The firm put a $1 price target on Sino Forest, which closed the trading session on the pink sheets at $7.33 after opening the day at $18.65. On the Toronto Stock Exchange, the shares opened at $18.21 and were halted at $14.46. As of April 29, Paulson & Co. owned 34.7 million shares of Sino Forest, and likely took an almighty beating today on that position. As of May 31, a around 33% of the company's outstanding shares had been borrowed by short sellers, up from 18% at the end of April. Today's decline turned out to be a jackpot for the shorts, while saddling Paulson & Co. with huge losses. If we assume that Paulson was still holding his 34.7 million share stake at the beginning of today's trading session, and did not sell any shares during the decline, his fund lost more than $130 million prior to the stock being halted on the TSE. If we go by the losses that the stock incurred in the U.S. on the pink sheets, Paulson lost around $400 million today on Sino Forest. Ouch!