...In so called risk (merger) arbitrage the emphasis is on the first word.The funny thing is, Paulson wrote the book (paper) on this stuff, see ya after the jump.
Cash-and-carry, buying physical and shorting a derivative is not arbitrage.
When people use the term "arbed away" when talking about market anomalies the are not talking about an arbitrage.
Shorting an ETF and buying the component equities is not an arb, it's just a hedged trade.
Same for Index Arbitrage....MORE
From Bloomberg:
Paulson Event-Driven Fund Said to Plunge 14% in October
Billionaire John Paulson posted a 14 percent loss in his firm’s event-driven hedge fund during October, adding to declines this year, two people with knowledge of the matter said.From 2011's "The "Risk" in Risk-Arbitrage by John Paulson, Paulson & Co., Inc."
The monthly drop left the Paulson Advantage fund down about 25 percent in 2014, said the people, who asked not to be identified because the information is private. Paulson Credit Opportunities lost 6.8 percent in October, leaving it down 3.4 percent in 2014.
Paulson’s $20 billion namesake firm had some of its biggest declines this year in October as a drugmaker deal unraveled and investments in Fannie Mae and Freddie Mac preferred shares tumbled. Losses in the second half of 2014 have been a setback for Paulson, 58, who had staged a comeback last year from wrong-way wagers on the U.S. recovery, the European crisis and gold.
The hedge fund manager is best known for making $15 billion in 2007 betting against the U.S. housing market and is worth $12.2 billion, according to the Bloomberg Billionaires Index.
Armel Leslie, a spokesman for New York-based Paulson & Co. at Peppercomm, declined to comment on the returns....MORE
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