Exclusive: The Paulson Portfolio Post-Mortem (In Which We Learn That The Maestro Himself Is Advising J.P. On Future Gold Prices)

One of the most fabled funds of recent years, John Paulson's Paulson and Co., has not had a good first half to 2010: not only was Paulson implicated in the biggest Goldman Sachs scandal in recent history (which took the 200 West firm a few hours worth of operating profits to settle with the SEC), but the firm has seen substantial outflows after a subpar performance in the first half of 2010, a time which has seen the firm's flagship Event Arbitrage ($16.6 Billion in AUM) fund lose just under 6% YTD and 6.6% in H2. Yet among the other Q2 losers, which have also included the firm's Merger Arb fund ($4.0 Billion, down 5.21% in Q2), and Credit Fund ($7.7 Billion, down 1.75% in Q2), nowhere was the pain as acute as for investors in the firm's reflation bet, better known as the $2 Billion Recovery Fund, which was down 12.6% in Q2. For the man who had rarely if ever tasted loss before, many are asking if the recent disappointing performance a sign that the multi-billionaire has peaked? And surely with a personal net wealth well in the billions, just how big is Paulson's motivation any more? If the fund is now nothing more than a levered bet on the broader market, surely there are other levered ETFs available that do not charge 2 and 20%, and may be better suited for the needs of the firm's LPs? Or is Paulson right, and once the market realizes the folly of its ways he will make his investors (in addition to himself) truly rich? Just what is the logic behind the investment choices? Read on to find out.

But first, here is a snapshot summary of the firm's various investment strategies, funds, along with strategy AUM and performance. (more)