John Paulson's telecom picks take an even bigger Leap

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When John Paulson founded his eponymous hedge fund company in 1994, his focus was merger arbitrage. Now, with a two-decade track record and one massive win in his credit strategy, he's again finding luck with his original investing style—and with telecommunications in particular.

So far this year, Paulson has won big on the mobile carrier SoftBank Corp.'s $21.6 billion controlling investment in Sprint Nextel, a deal in which he lobbied successfully for a higher price and a bigger cash component. He's improved his returns from MetroPCS's sale to the T-Mobile unit of Deutsche Telekom by demanding better terms and less debt. And in the wake of news late Friday that AT&T planned to take over Leap Wireless in a $1.2 billion cash deal—valuing the prepaid wireless provider at 88 percent above its share price at that time—Paulson appears primed to make even more from his telecom holdings.

Paulson is Leap's third largest shareholder, with 7.8 million shares, according to recent filings, or about 10 percent of the shares outstanding.

It's early yet in the Leap deal and shareholders and government officials must still approve the deal in order for it to be completed. Unsurprisingly, though, Paulson appears set to back it.

(Read More: Delivering Alpha: 2012's Best and Worst Ideas)

Leap is a "perfect fit for AT&T," said a Paulson & Co. official in an e-mailed statement, adding that "they get valuable spectrum and five million customers." The official stopped short of saying his firm would vote in favor of the deal. But given the high premium on the deal and reports that another major shareholder, the private-equity fund MHR Fund Management, is already on board, investor approval seems likely. MHR declined to comment.

Paulson's two merger-arb funds have been standout performers this year, with gains of 16 percent in the levered version and 8 percent in the un-levered version through June. His firm's Recovery Fund, which bets, among other things, on U.S. financial stocks, is his best performer, at 26 percent, while his gold fund is down more than 64 percent. His credit fund, which shot to fame in 2007 with a sub-prime mortgage shorting strategy that returned 590 percent at the time, is up about 12 percent.

Those double-digit returns make Paulson, a onetime mergers-and-acquisitions banker at Bear Stearns, one of relatively few hedge-fund managers to keep pace with the torrid stock market at a time when the Standard & Poor's index is flirting with new tops for the year and the average hedge fund is struggling to maintain percentage gains in the low single digits. Other exceptions to the rule include Dan Loeb's Third Point Partners, whose offshore fund is up about 13 percent through June, and Larry Robbins, whose Glenview Capital Management is up more than 28 percent.

Robbins and Paulson will both be featured speakers Wednesday at the Delivering Alpha conference, co-sponsored by CNBC and Institutional Investor.

—By CNBC's Kate Kelly. Follow her on Twitter @KateKellyCNBC.