Twitter Hedge Fund Knows More Than John Paulson

It's been a rough few weeks for John Paulson, of Paulson & Co., but not everyone in the hedge fund industry has has it rough recently.

There is an article on CNBC that London-based hedge fund Derwent Capital Markets, actually had a strong first month of trading.

The Derwent Absolute Return Fund returned 1.57% net of fees in the month of July, according to a investor letter obtained by CNBC. The hedge fund industry as a whole had a return of 76 basis points, while the S&P 500 lost more than 2% during the same time period.

The fund is run by Paul Hawtin and started with approximately $40 million in start up capital. The fund uses tweets and gathers data from the tweets to help it gauge the collective mood of the market.

The firm opened to public investment in April.

The idea behind the fund came from professors Johan Bollen and Huina Mao of Indiana University-Bloomington who wrote a paper in October 2010, entitled, "Twitter mood predicts the stock market." The professors were surprised that the mood behind the Twitter feeds had an 87.6% correlation to the Dow Jones Industrial Average.