John Paulson, the hedge fund manager who went before Congress last week to discuss hedge fund practices, has started to buy securities backed by residential mortgages. His move marks the latest example of a famously bearish investor shifting gears to profit from depressed prices in the global credit markets. US residential mortgage securities fell in value last week after Hank Paulson, Treasury secretary, said that the federal government had decided against buying toxic assets as part of its $700bn Tarp scheme. John Paulson (not related to the Treasury secretary), has told investors he started buying troubled MBS at the end of last week, hoping to capitalise on price falls that followed the Treasury announcement. Paulson, who has $36bn under management, was scheduled to hold a dinner at New York’s Metropolitan Club on Monday night to brief his investors on his plans.
