Mega Millions and Gold

April 4, 2011 James Heinsman Hedge Fund News

Wealth of Hedge Fund Managers

Perhaps not too shockingly is the fact that hedge fund managers are making mega bucks. But what might rate as news was the figure John Paulson earned, especially compared with that of his take home pay prior to that, rendering him the “top earning hedge fund manager,” at a staggering $4.9bn (significantly higher than $3.7bn).

Is Silence is Golden?

Paulson purchased a $1.2bn stake from AngloGold Ashanti. Figures for the company’s 2010 adjusted headline earnings were $787m (without accelerated hedge buy-back expenses). But how great is gold these days anyway? According to John Paulson (and, given his successful prediction vis-à-vis the housing crisis we might want to trust the guy), pretty good. He believes that gold will escalate to at least $2,400 and may even increase to as much as $4,000. Others allegedly in the know, tend to put this figure significantly lower however. For example, experts from Deutsche Bank are predicting the figure to be as low as $1,550 and they have quite a reputation, having been hailed by Bloomberg as “the most accurate gold forecaster of 2010.” So it really depends on who you’re going to trust.

Precision of Paulson?

You might be well advised to trust Paulson though, at the end of the day. You just need to look at the guy’s success, especially as compared with other hedge fund managers. For example, figures from 2001 of top hedge fund managers’ earnings show that combined, it didn’t even hit the $5bn figure! Alone, Paulson made that last year although in 2010 the top managers did bring in a combined $22bn (but that’s with Paulson’s contribution to the lump sum too).

So when push comes to shove, one might want to trust the wisdom of Mr. Paulson. In my book, if he told me to jump, I might just ask “how high”?

Bloomberg, Gold, Hedge Funds, John Paulson,

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