Some hedge-fund stars of 2007 are having an encore year. In the process, they are defying sceptics who questioned whether they could keep their runs going.

John Paulson, who directed the hedge fund Paulson & Co to gains of almost $15bn (€9.4bn) last year, is up as much as 20% in some of his hedge funds through June 30, according to investors, thanks to continued bets on the woes of financial companies.