The hedge fund manager who made $3.7 billion betting on the collapse of the mortgage market is apparently confident enough in financials again to start a hedge fund to "provide capital" to them (a.k.a., buy their stocks and/or lend them money). Bloomberg:

[John] Paulson aims to open the fund by December, according to two people with knowledge of the matter. His New York-based Paulson & Co. hasn't set a fund-raising target, said the people, who declined to be identified because the plans aren't complete.

Paulson was confident enough about the housing market's collapse to bet the farm. Having made billions betting against financials, it now appears he is reversing his position and betting on financials, though it remains unclear which and what kind of companies he'll invest in.

Does this mean Paulson thinks that this week's rally in financials is the real thing? Not necessarily. More likely it means he wants to be ready to be the buyer/lender of last resort when banks and other financial services companies suddenly realize they need to raise capital again (i.e., when there's another leg down). Assuming the fund is up and running by December, his timing could be perfect again.