Paulson & Co Profits From Lloyds Short ~ market folly

Monday, February 16, 2009

Paulson & Co Profits From Lloyds Short

Paulson & Co has made a ginormous (yes, ginormous) amount of money from the financial carnage over the past 2 years. Here is yet another example:

"Feb. 13 (Bloomberg) -- Paulson & Co., the hedge fund run by billionaire John Paulson, may have made as much as $67 million in 25 minutes today as Lloyds Banking Group Plc lost about 5.9 billion pounds ($8.5 billion) in market value.

Lloyds fell the most in 20 years after saying HBOS Plc, the U.K. lender it took over last month, would report a 10 billion- pound pretax loss. The shares plunged as much as 43 percent in less than 25 minutes of London trading.

Paulson, who made billions from betting against the subprime mortgage market, held a Lloyds short position representing 0.79 percent of the bank, or 129.3 million shares, as of Jan. 20, according to a regulatory filing. "

We had noted in the past that Paulson was shorting UK financials. That was revealed back in September and had you piggybacked his play, you'd have made a pretty penny. Do note though, that he has started to slowly become constructive in the distressed segment, eyeing holdings on the long-side that he had previously shorted. In addition to being handsomely short most things financial, Paulson & Co have been active on the merger arbitrage side of things, filing a 13G on Rohm & Haas recently. For more on Paulson's badassedness, check out their 2008 year end report.

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