Some hedge-fund stars of 2007 are having an encore year. In the process, they are defying sceptics who questioned whether they could keep their runs going.

John Paulson, who directed the hedge fund Paulson & Co to gains of almost $15bn (€9.4bn) last year, is up as much as 20% in some of his hedge funds through June 30, according to investors, thanks to continued bets on the woes of financial companies.


Not all of last year's heavy hitters are belting homers. Two funds run by emerging-markets specialist Marko Dimitrijevic at Everest Capital are down about 10% through June, after gaining 30% last year. Even some of those who anticipated the troubles of various financial giants haven't been able to clean up. Hedge funds run by David Einhorn and William Ackman, for example, were up only a few percentage points through June.

Our favorite quote from the article is this one from Daniel Arbess of Perella Weinberg:

"There's nothing behind this rally. There's hazard ahead for investors who jump into financials now," he said. He wouldn't comment on his performance.

Amen to that, brother.

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