Paulson’s New York-based hedge fund, Paulson & Co., manages about $28 billion.

They have been doing so well that he out-earned long-time hedge fund king, George Soros, last year. Soros ranked second in the 2007 hedge fund earnings league with a measly $2.9 billion.

Paulson pulled it off by acting on a hunch that U.S. property prices were overvalued since early 2006.

So, his fund took positions in esoteric mortgage-related instruments such as credit default swaps and collateralised debt obligations to profit when the property bubble burst.

And now they have cashed-in massively.

His Credit Opportunities Fund, through which many of the deals were structured, delivered a whopping 590% return last year!

That’s the kind of performance for which rich investors pay millions in fees. But as I’m about to show you, you needn’t pay any fees at all!

A huge opportunity is opening-up

You see, Paulson isn’t a one-hit wonder. He started his firm in 1994 and his real speciality is focussing on the debt of distressed companies and securities of firms going through mergers and restructurings.

His merger fund gained 52% last year.

So, you can almost see the chaps at Paulson & Co. rubbing their hands in glee at the opportunities opening up as the credit crunch continues to wreak havoc across the business world.

The credit crunch has already caused $324 billion of losses and write-downs. And it left the banks saddled with $230 billion of loans.

Banks have been desperate to sell those loans to raise the funds that they need for their operations. The only way that they have been able to do that is to sell them at a steep discount.

They now say that they’ve managed to cut the backlog of loans to about $93 billion since August. But they’ve had to sell their loans for as little as 63 cents on the dollar to do that.

The upshot: There’s a ton of money to be made from buying good loans on the cheap. But you have to have ready money to do that.

One company has money in abundance…

One of the main reasons we at Profit Hunter are invested in this play is because we believe the ongoing financial turmoil in the West will give the Gulf merchant bank a chance to snap-up undervalued Western assets with its access to the Gulf’s vast petrodollar reserves.

And that’s exactly what we are seeing right now. We’d love to send you all the details of this potential explosive investment.

This canny merchant bank already manages more than $15 billion in funds. It’s now setting-up a multimillion-dollar fund to buy distressed loans and bonds. And John Paulson is going to help invest it.

It will raise money for the fund from its deep-pocketed clients and invest in through partner companies, including Paulson & Co.

The latest fund is a perfect example of what we at Profit Hunter love about this company. Its access to the Gulf’s vast pool of petrodollars gives it all the funds that it needs to take advantage of the opportunities being created by the credit crunch.

About 80% of their clients are high net-worth individuals and companies from the Persian Gulf. As long as the petrodollar boom continues, this company remains a brilliant investment.

And that means there’s plenty of room for further gains to come…

The petrodollar story isn’t over

You see, even if the price of oil falls significantly – say even to $70 per barrel – the amount of money flowing into the Gulf would be colossal.

At $70 per barrel, McKinsey estimates that the oil exporting countries would have so much excess cash on hand that they will acquire $6.9 trillion of foreign assets by 2012. But the chances of us ever seeing $70 oil again for a prolonged period don’t seem very high to me!

So, there are going to be plenty of petrodollars for this brilliant little compnay to keep hoovering up to invest in undervalued Western assets.

Most of the Gulf States set their budgets based on an estimated oil price of about $40-$50, so there is an ample cushion for economic growth in the region. That’s good news for this firm’s Gulf investment fund as well.

Goldman Sachs’s latest estimate is for the price of oil to be $141 per barrel in the second half of this year. And Goldman and OPEC both see $200 oil over the medium-term as a very real possibility.

But prices are obviously volatile and there are too many unknowns out there.

That’s why I believe this is the single best way to profit from the tide of petrodollars that are going to keep flowing to the Gulf without actually going for a direct oil play.

You can get all the details here.

Regards,

Manraaj Singh
Editor
Profit Hunter

Source: How to Invest With the World’s Greatest Hedge Fund Manager

No sooner had the words “oil at $120 per barrel” left my lips yesterday, Chakib Khelil, President of OPEC, said it could hit $200 and there was little he or his cartel could do about it.

It’s making Americans restless…

A group of senators have just written a letter to President Bush accusing the Saudi’s of slashing oil production by 2 million barrels a day over the last three years, even as the price of oil has skyrocketed.

The Saudis don’t seem too bothered about America’s oil woes. Of course, the U.S. is making OPEC’s job so much easier…

Its interest rate cuts are driving down the value of the dollar and its sabre rattling at Iran is boosting the “risk premium” in the price of oil.

Some analysts have put the value of that premium at up to $40 per barrel.

But the simple fact is…

OPEC won’t raise output… non-OPEC producers can’t

OPEC simply won’t raise output, the non-OPEC producers simply can’t.

Right now, the non-OPEC countries produce about 60% of global oil supply – about 50 million barrels a day. But they’re stuck there. In fact production is falling quickly in some of the biggest of them.

Norway’s output has fallen by 25% from its peak in 2001. British output has slumped by 43% in eight years. In America, the giant Prudhoe Bay field in Alaska has seen output drop by 65% from its peak two decades ago…

And in Mexico, production at the giant Cantarell oil field is collapsing and they haven’t found any new fields to replace it. But Mexico’s economy is growing rapidly. So, domestic consumption is shooting up while production is falling. Mexico’s exports could be wiped-out within five years. That means more sleepless nights for America’s leaders because Mexico is the second-biggest oil exporter to the US.

Then there’s Russia… the biggest contributor to the growth in global energy supplies over the last decade. Output shot up from about 6 million barrels in 1996 to about 10 million barrels per day today. But the Russians say that they’ve hit peak production… so it’s all down hill from here.

Of course, huge chunks of Siberia are still unexplored and there could be lots more oil out there.

But the Russian government has shown a nasty habit of muscling-out Western companies operating in the country to gain more control over its energy resources. So they are reluctant to invest and we probably won’t see any meaningful growth in supplies there for years.

OPEC turns the screws on global oil prices

As they see output falling everywhere, OPEC is steadily turning the screws on global oil prices.

I think it’s almost funny to watch the reactions of politicians everywhere. Someone must have forgotten to tell them that OPEC is a cartel. Its job is to make its members rich, not provide cheap oil to faltering Western economies.

And it must be doing something right… because the petrodollars are really beginning to pile up.

Sovereign wealth funds already control $3.5 trillion in assets – that’s more than the U.K. French or German economies are worth. But that’s nothing compared to what’s still to come…

By 2015, their assets will be worth more than the entire U.S. economy and by 2016 they will overtake the European Union.

Leave China out of that equation and practically all those sovereign wealth funds are being boosted by the rising price of oil.

And the fastest growing funds are based in oil producing countries that don’t figure on most investor’s maps.

In the last five years, Nigeria’s SWF has grown by 291%, Oman’s by 256%. Kazakhstan’s SWF is up 162%; Angola’s by 84%…

How to ride the ‘petrodollar’ bandwagon

Now you can’t invest directly in a sovereign wealth fund, but they’re an excellent way of keeping track of where the money is going today and where the biggest economic booms are happening right now…

The point that I’m trying to drive home here is that high oil prices aren’t going to benefit all the oil producers equally.

The real tide of petrodollars is flowing to the OPEC countries. The big winners are going to be countries like Nigeria and Angola, Venezuela and Bahrain… and we can already see the winners and losers in the new equation.

Here at Profit Hunter we are well placed to benefit from this tide of wealth, which can only increase in the years ahead.

We aren’t directly invested in oil. There are too many unknowns that go into its price. Instead we are focussed on uncovering the investment opportunities being opened up by this dramatic shift in economic power.

And we have no doubt that that shift is going to continue.

We’ve been emphatic that we are now in the era of $100 oil. I doubt that we are ever going to see it go back below that price for a sustained period.

What does all of this mean for us as investors?

Simple – if we can tap into the same pools of capital that are fuelling the growth of these sovereign wealth funds, we are going to be on to very good thing indeed.

You’re very welcome to join us… just follow the links below
Regards,

Manraaj Singh
Editor Profit Hunter