Paulson's $5 billion payout shocks, raises questions

BOSTON (Reuters) - Billionaire hedge fund manager John Paulson, whose bet against the overheated housing market made him one of the world's wealthiest people, became a lot richer last year.

By earning an estimated $5 billion in 2010 thanks to bets the economy would recover, the 55-year investor likely set a new record for the $1.9 trillion hedge fund industry's biggest-ever annual payday. He beat his own record, which he set in 2007 with a $4 billion haul made off the subprime bet.

The Wall Street Journal first reported Paulson's payout in its Friday edition, and investors familiar with Paulson's portfolios said the number is likely correct given the manager's asset size and his recent profitable bets on Citigroup and gold.

For Paulson, the payday comes after he reversed deep losses in his funds halfway through the year, and it may put to rest lingering talk that his investing prowess was limited to a lucky bet during the subprime era, investors said.

"He did it on the short side and on the long side," said Brad Alford, founder of Alpha Capital Management, which invests with hedge funds. "He proved that he can really do it all."

via ca.news.yahoo.com