Paolo Pellegrini, the former Paulson & Co. executive who helped that firm make more than $3 billion with bets on a U.S. housing crash, plans to return money to outside investors in his hedge fund after losing about 11% this year, according to a person with direct knowledge of the decision.
PSQR, which Mr. Pellegrini started last year, plans to give clients their money by the end of September, said the person, who asked not to be identified because the information is private. Mr. Pellegrini will continue to manage his own money, and he may reopen the fund to outside clients in the future, the person said.
Mr. Pellegrini started his hedge fund last year after helping billionaire John Paulson engineer a bet against subprime mortgages that catapulted their hedge funds to gains of as much as 590% in 2007. At PSQR, he runs a macro hedge fund, which seeks to profit from broad economic trends by trading stocks, commodities and currencies, and holds his trades for an average of a week.
Mr. Pellegrini couldn't be reached for comment.