Montreal, Canada

John Paulson, Chairman of Paulson & Co. and adviser to $33 billion in assets under management is bullish on stocks, gold bullion and gold mining equities. He also likes GMAC bonds.

Paulson made huge bets against mortgage-backed securities starting in 2006 and scored billions for his investors and himself as the housing market unravelled starting in mid-2007. That trade personally reaped him a $3 billion dollar profit.

"Today our net long exposure is perhaps the highest it has ever been in our portfolio," Mr. Paulson said during a luncheon presentation at the Japan Society this week.

"We still find a lot of compelling long investments on the equity side," he said, citing specifically Bank of America (NYSE-BAC), U.S. cable-television giant Comcast (NASDAQ-CMCSA) and Germany's Heidelberg Cement (Frankfurt-HDD).

Mr. Paulson said that at the end of 2008 he viewed the credit correction as having run its course. By April he had poured cash back into the sector.

"That is why we don't have any shorts in credit," he said. Credit spreads have crashed since peaking last winter with the entire gamut of speculative and investment-grade debt securities now trading at their lowest yields since before the credit crash in September 2008.

Paulson remains bullish on Bank of America.

Bank of America was identified as one of Mr. Paulson's biggest positions when regulatory filings were released at the end of the second quarter of this year.

Based on his estimates of the company's earnings potential and the expectation that loan loss provisions will start to drop in 2010, Mr. Paulson remained upbeat on the beleaguered bank.

"I think the worst is behind us in terms of provisioning," Mr. Paulson said, adding: "I would expect provisioning expense to be considerably lower in 2010 versus 2009 and again much lower in 2011 versus 2010."

Based on the current price at $15.47, "That seems to be a great buy today. If we look across the markets we find a lot of great buys, whether it is Heidelberg Cement or Comcast," he added.

Given his prescient bearish call on mortgage credits, Mr. Paulson's views are widely watched for what he has in his $33 billion investment portfolio.

He highlighted the attractive yields on credit issued by GMAC due in September 2011, the former General Motors automotive financing company that the U.S. government bailed-out at the end of 2008.

According to Paulson, the government's involvement is equivalent to an explicit guarantee on GMAC's finances. "So instead of buying a Treasury bond yielding 84 basis points, I can buy GMAC which is almost, I consider, equivalent to a government bond and I can get 11 percent. That is why we have allocated so much money to this particular security," he said.

Even as credit and equity markets looked attractive, he did reiterate his concerns that over the long-term inflation will be a problem because the government's mountain of stimulus cash will be difficult, politically, to withdraw from the economy.

"Therefore we are concerned about high rates of inflation in the future. As an investor I became very concerned about having my assets denominated in U.S. dollars," he said. "So I looked for another currency in which to denominate my assets in. I feel that gold is the best currency."

Mr. Paulson's combined gold and gold-related investments made up more than 46 percent of his firm's holdings at the end of the second quarter of this year. In January, the Wall Street hedge fund titan will launch a precious metals hedge fund with $250 million dollars of his own money.