Paulson & Co., the hedge fund run by billionaire John Paulson, may have made as much as $67 million in 25 minutes today as Lloyds Banking Group Plc lost about 5.9 billion pounds ($8.5 billion) in market value, Bloomberg reported.
Lloyds fell the most in 20 years after saying HBOS Plc, the U.K. lender it took over last month, would report a 10 billion- pound pretax loss. The shares plunged as much as 43 percent in less than 25 minutes of London trading.
Paulson, who made billions from betting against the subprime mortgage market, held a Lloyds short position representing 0.79 percent of the bank, or 129.3 million shares, as of Jan. 20, according to a regulatory filing. DataExplorers.com, which tracks share borrowing from London, said 1.1 percent of the stock was on loan as of Feb. 11, the most recent data available. That's down from as much as 8 percent six months ago and suggests Paulson held the bulk of the remaining short position.
"It wasn't really shorted at all before this share drop," Julian Pittam, a managing director at DataExplorers.com, said in an telephone interview from London. "There's little upside and lots of downside in banks when there's this much political rhetoric and volatility going on."
Armel Leslie, a spokesman for the $30 billion New York-based hedge fund, declined to comment. There's no indication that Paulson closed his short position, and there won't be until a subsequent filing.
Paulson's Credit Opportunities Fund soared almost sixfold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 percent, compared with a loss of 19 percent for hedge funds on average.