Bank of America Pulls Clients’ Money From Paulson Hedge Fund (1)
2015-08-05 21:22:35.450 GMT
(Updates with positions in fifth paragraph.)
By Katherine Burton and Hugh Son
(Bloomberg) -- Bank of America Corp. is pulling its wealthy
clients’ money from one of billionaire John Paulson’s hedge
funds and reviewing another because of concern that large
positions may be hard to sell.
The bank sent a memo to financial advisers telling them to
withdraw about $80 million from Paulson’s Advantage Fund because
of illiquid investments and elevated volatility, according to
two people familiar with the matter. It also said they shouldn’t
put any more client money into the firm’s Special Situations
Fund and put it on heightened review because of concern over
some large illiquid investments, said the people, who asked not
to be named because the funds are private.
“As part of our commitment to our clients, we provide
rigorous initial due diligence and ongoing detailed analysis of
all funds on our platform, and remain in constant dialog with
fund managers regarding changes to the funds or their
management,” said Susan McCabe, a spokeswoman at the bank.
Paulson’s Advantage Fund gained 2.2 percent this year
through June, after being up 8 percent through May. The Special
Situations Fund lost 3.8 percent this year through June.
One of the positions that concerned the bank was Extended
Stay America Inc., the people said. Paulson is one of the
largest owners with 23 percent of the hotel operator, according
to a May 28 regulatory filing. The bank also cited the fund’s
stake of about 25 percent in OneWest Bank, which was acquired by
CIT Group Inc. earlier this week. Paulson made almost $1 billion
on that transaction across two funds.
Bank of America told the advisers they could recommend
Paulson’s merger arbitrage fund as a replacement, according to
the people.
A spokesman for Paulson & Co. declined to comment. The Bank
of America memo was reported earlier Wednesday by ValueWalk.
For Related News and Information:
John Paulson Said to Make Almost $1 Billion on OneWest Sale
Paulson Said to Extend Gains Last Month at Most of His Funds
Top fund stories: TFUN <GO>
Top finance stories: TOP FIN <GO>
Hedge fund home page: HFND <GO>
To contact the reporters on this story:
Katherine Burton in New York at +1-212-617-2335 or
kburton@bloomberg.net;
Hugh Son in New York at +1-212-617-7872 or
hson1@bloomberg.net
To contact the editors responsible for this story:
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Josh Friedman, Mary Romano
2015-08-05 21:22:35.450 GMT
(Updates with positions in fifth paragraph.)
By Katherine Burton and Hugh Son
(Bloomberg) -- Bank of America Corp. is pulling its wealthy
clients’ money from one of billionaire John Paulson’s hedge
funds and reviewing another because of concern that large
positions may be hard to sell.
The bank sent a memo to financial advisers telling them to
withdraw about $80 million from Paulson’s Advantage Fund because
of illiquid investments and elevated volatility, according to
two people familiar with the matter. It also said they shouldn’t
put any more client money into the firm’s Special Situations
Fund and put it on heightened review because of concern over
some large illiquid investments, said the people, who asked not
to be named because the funds are private.
“As part of our commitment to our clients, we provide
rigorous initial due diligence and ongoing detailed analysis of
all funds on our platform, and remain in constant dialog with
fund managers regarding changes to the funds or their
management,” said Susan McCabe, a spokeswoman at the bank.
Paulson’s Advantage Fund gained 2.2 percent this year
through June, after being up 8 percent through May. The Special
Situations Fund lost 3.8 percent this year through June.
One of the positions that concerned the bank was Extended
Stay America Inc., the people said. Paulson is one of the
largest owners with 23 percent of the hotel operator, according
to a May 28 regulatory filing. The bank also cited the fund’s
stake of about 25 percent in OneWest Bank, which was acquired by
CIT Group Inc. earlier this week. Paulson made almost $1 billion
on that transaction across two funds.
Bank of America told the advisers they could recommend
Paulson’s merger arbitrage fund as a replacement, according to
the people.
A spokesman for Paulson & Co. declined to comment. The Bank
of America memo was reported earlier Wednesday by ValueWalk.
For Related News and Information:
John Paulson Said to Make Almost $1 Billion on OneWest Sale
Paulson Said to Extend Gains Last Month at Most of His Funds
Top fund stories: TFUN <GO>
Top finance stories: TOP FIN <GO>
Hedge fund home page: HFND <GO>
To contact the reporters on this story:
Katherine Burton in New York at +1-212-617-2335 or
kburton@bloomberg.net;
Hugh Son in New York at +1-212-617-7872 or
hson1@bloomberg.net
To contact the editors responsible for this story:
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Josh Friedman, Mary Romano