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John Paulson Puts Up Personal Holdings To Continue Longs In Greece, Puerto Rico & Mallinckrodt?

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John Paulson Puts Up Personal Holdings To Continue Longs In Greece, Puerto Rico & Mallinckrodt?

John Paulson's hedge fund, Paulson & Co., entered into a few risky investments that didn't pay off, as noted by ZeroHedge, which resulted in heavy losses and many investors fleeing the fund.

Paulson invested millions of dollars into Greece in hopes that the struggling economy would be able to turn itself around and return to growth. Paulson was also one of Puerto Rico's largest foreign hedge fund investors.

Due to heavy losses, Bank of America Merrill Lynch liquidated $81 million of its clients' money from one of Paulson's funds and put another fund under "heightened review," The New York Times noted back in August.

The New York Times characterized Paulson's investments in the two countries as "bold" as he was "one of a handful" of fund managers to allocate funds to the struggling economy.

Paulson also made a large bet on Mallinckrodt PLC (NYSE: MNK) as his fund was one of the company's largest investors. The stock collapsed back in November following a tweet by Citron Research that read, "At these prices $MNK has signif more downside than $VRX-- far worse offender of the reimb sys - more to follow. VRX can't live in a vacuum."

Benzinga reported last week that Mallinckrodt could potentially acquire The Medicines Company (NASDAQ: MDCO). This could prove to be a catalyst for Mallinckrodt's stock that can boost Paulson's fund.

Mallinckrodt potential acquisition of The Medicines Company was later corroborated by Bloomberg and Reuters.

See Also: How To Trade Like John Paulson?

Putting His Money Where His Mouth Is?

According to Bloomberg, Paulson has pledged to place his personal investments as additional collateral for a credit line his firm has with HSBC Bank USA. The publication noted that the holdings will serve as guarantee for a new personal line of credit for Paulson.

Bloomberg added that Paulson is using his own personal wealth to "back the firm's borrowings" after investment losses and an outflow of client funds slashed the firm's assets under management by more than half from their peak value.

Finally, Bloomberg pointed out that fund managers often establish line of credits to meet routine expenses, similar to how retailers arrange financing to pay for their inventory. It is not yet known if the fund will continue holding its troubled assets in Greece, Puerto Rico and Mallinckrodt.

 

Related Articles (MDCO + MNK)

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