John Paulson looking to buy distressed debt: report

Wed Dec 31, 2008 5:03am EST

(Reuters) – John Paulson, who runs the $36 billion hedge fund firm Paulson & Co, is looking to buy distressed mortgages and distressed debt, despite being bearish on the overall economy, Bloomberg reported.

Paulson wrote in a 2009 outlook to investors that he is interested in investing in debt restructurings, bankruptcies, strategic mergers and financial recoveries, the agency said.

His largest fund, the $13 billion Paulson Advantage Plus, has risen about 38 percent through Dec 19, the agency said, citing the undated report.

The hedge fund industry is facing its worst year ever with heavy losses prompting large numbers of investors to request their money back. A large number of funds have imposed restrictions on investor redemptions.

In his letter, Paulson criticized his peers and their tendency this year to block or curb clients’ attempts to get their money back, the agency said.

“We think it’s a mistake for managers to use gates and other tools to limit investor access to their funds,” Paulson said.

A spokesman for Paulson could not be immediately reached by Reuters for comment.

Paulson & Co, along with J.C. Flowers & Co and Dune Capital Management, is a prospective member of a consortium to buy the assets of failed mortgage lender IndyMac, a source familiar with the matter told Reuters earlier this week.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by David Cowell)