market folly

Hat tip to Barry Ritholtz for posting this up. Below is John Paulson and hedge fund Paulson & Co's letter to investors where they seek to clarify a few things as accusations regarding the Goldman Sachs fraud case start to fly. In addition to the letter below, if you want to be taken through the inside account of Paulson's subprime trade, we highly recommend Gregory Zuckerman's book that focuses on Paulson: The Greatest Trade Ever.


Embedded below is Paulson & Co's most recent letter to investors:



You can directly download a .pdf here.

So, hopefully that helps clear the air regarding their involvement. Also, given the topic of Paulson's letter, we thought it fit to also post up a presentation from one of the CDO investments back in 2007 that Paulson was betting against. If you haven't seen it already, below you will find Goldman Sachs and ACA's flipbook on Abacus 2007-AC1, a $2 billion synthetic CDO referencing a static RMBS portfolio. Here is the document:



You can download it via .pdf here as well.

Paulson sets things straight as to how they went about their investments at the time and it's intriguing to look back on the Abacus presentation and think about how all of this was going on just a few short years ago. For more on the ongoing CDO/CDS/subprime debate swirling around, we also detailed hedge fund Magnetar Capital's recent letter to investors regarding the investments they profited from during the housing bubble as well.

For more on hedge fund Paulson & Co, keep in mind that we've been tracking their equity portfolio and recently detailed their brand new stake in American Capital (ACAS). Additionally, we've covered Paulson & Co's recent performance numbers for those interested.