John Paulson, who started a public row with Bear Stearns in early June over what he claimed was “market manipulation” by the Wall Street investment bank, has seen his hedge fund holdings soar in value as the CDO market has since tanked: From MarketWatch earlier today:

A credit hedge fund run by Paulson & Co. gained nearly 40% in June as subprime mortgage bets paid off again, according to a person familiar with the firm. The Paulson Credit Opportunities fund, set up last year to take advantage of potential mortgage turmoil, returned 39.95% last month, leaving it up 129.22% so far this year, said the person, who’s seen a copy of the firm’s June investor update.

You think Paulson’s short the ABX? You’ll notice that his row with Bear Stearns has quickly faded into background noise as Bear Stearns itself ran aground with two subprime-heavy hedge funds it managed in June (both, apparently, were long on subprime). I can’t help but wonder if the two are somehow connected, although I have nothing to support or refute that thought – it’s just that Paulson got very quiet, very quickly about his earlier “market manipulation” claims. Without knowing any better, I’d have to say that, sometimes, crying wolf really does pay off.