Hedge funder John Paulson hits the chocolate

John Paulson, the New York hedge funder famous for betting the housing market would collapse and risky mortgages would tumble in value (as a result of which he personally banked $4bn) has quietly upped his stake in Cadbury twice in as many days.

Paulson, whose fund has now acquired a 2.54 per cent stake in the confectioner, is betting that Kraft, which launched a hostile $16.2bn bid for Cadbury on Monday, will have to raise its offer. Cadbury says the Kraft offer, 720p per share, is anticlimactic, or "derisory" according to one senior exec.

But recessions are good times for sweetmakers and the potential takeover of Cadbury, makers of Flake, Dairy Milk and Jaffa Cakes, by Kraft, the makers of Toblerone, Cote D'Or and Suchard, would knock privately owned Mars-Wrigley from the global No 1 spot.

But does John Paulson have a sweet-tooth? Certainly he needs cheering up. Last week, his authorised biography The Greatest Trade Ever by Wall Street Journal writer Gregory Zuckerman, was published in the US.

Based on extensive interviews, it tells the story of Paulson’s now legendary perfect trade that established him in the pantheon alongside Warren Buffett and George Soros. Paulson's take was the largest one-year payout in the history of the financial markets. The next year, he made another $5bn for his firm by betting against financial companies with exposure to housing.

But Paulson, who smartly moved from subprime real estate to gold (and now to chocolate), is disappointed with Zuckerman's largely laudatory book.

"It contains numerous inaccuracies and fails to capture the essence of the credit bubble," he said in a statement. "The writing style is indicative of a gossip tabloid rather than respected financial journalism. Unfortunately, the opportunity to create a meaningful documentation of an important time in financial history was lost."

A billionaire is hard to please. ·