Paulson & Co, last year's most successful hedge fund, has told investment bankers it is ready to consider backing rescue recapitalisations of troubled financial institutions – signalling a switch from betting against the sector to buying into it.

John Paulson, founder of the $35bn New York hedge fund, told clients on a conference call last week that he remained extremely bearish, according to two investors who took part in the call. But he is prepared to take long positions across mortgage securities, banks and finance houses as prices fall to his target levels.

Paulson shot to prominence last year when its bet against US subprime mortgages saw it make a profit of more than $10bn across its funds – the most profitable trade in history. It has continued to gain, though less spectacularly, this year.