|Born||Alfred G. Paulson (Alfredo Guillermo Paulson)
December 14, 1955 (age 59)
Queens, New York, U.S.
|Residence||Manhattan, New York, U.S.|
|Alma mater||New York University (B.S.)
Harvard Business School (M.B.A.)
|Occupation||Founder and President of Paulson & Co.|
|Net worth||US$11.4 billion (October 2015)|
|Spouse(s)||Jenny Zaharia (m. 2000)|
Alfredo Guillermo Paulsen
John Alfred Paulson (born December 14, 1955) is an American hedge fund manager and billionaire who heads Paulson & Co., a New York-based investment management firm he founded in 1994. He has been called "one of the most prominent names in high finance" and "a man who made one of the biggest fortunes in Wall Street history".
His prominence and fortune were made in 2007 when he earned "almost $4 billion" personally and was transformed "from an obscure money manager into a financial legend" by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market. In 2010, Paulson earned $4.9 billion. The Forbes real-time tracker estimated his net worth at $11.4 billion on September 18, 2015.
Early life and education
His father was born Alfredo Guillermo Paulsen in Ecuador to a father of half French and half Norwegian descent and an Ecuadorian mother. Alfredo was orphaned at fifteen and at age sixteen moved to Los Angeles with his younger brother Alberto. Alfredo enlisted in the US Army where he served and was wounded in Italy during World War II. He later changed his surname from Paulsen to Paulson.
John's mother was the daughter of Jewish immigrants from Lithuania and Romania who had moved to New York City. Jacqueline met Alfred while they both attended UCLA. They wed and moved to New York City where Alfred worked at Arthur Andersen and later as the CFO at public relations firm Ruder Finn.
John grew up in the Le Havre apartment complex in Queens. His family later moved to a modest home in Beechhurst, Queens. He attended local public schools, where he entered a program for gifted students. He attended synagogue with his family at the Whitestone Hebrew Centre but also listed the "Jesus club" and the "divine light club" among his interests in his yearbook at Bayside High School. Paulson did not find out that his father was not Jewish until he was twelve.
In 1973, Paulson entered New York University (NYU). He studied creative writing, film production, and philosophy but grew bored with school. He traveled to South America and stayed with a wealthy uncle in Ecuador which he told author Gregory Zuckerman, brought him "back to liking money again”. Traveling to Quito he started his first business venture selling cheap children’s clothing to his father back in New York who successfully marketed the clothing to several department stores. Later, Paulson and his father branched into wood parquet flooring.
Realizing that sales would not provide a steady and secure cash flow, Paulson returned to NYU in 1976 where he began to excel in business studies. According to Zuckerman, at NYU he "developed a reputation among his classmates for having a unique ability to boil down complex ideas into simple terms". In 1978, he graduated valedictorian of his class summa cum laude in finance from New York University's College of Business and Public Administration. He went on to Harvard Business School, on a Sidney J. Weinberg/Goldman Sachs scholarship, earning an MBA as a George F. Baker Scholar (top 5 percent of his class) in 1980.
Paulson began his career at Boston Consulting Group in 1980 where he did research, providing advice to companies. Ambitious to work in investment on Wall Street, he left to join Odyssey Partners where he worked with Leon Levy. He moved on to Bear Stearns working in the mergers and acquisitions department, and then to Gruss Partners LP, where he made partner.
In 1994, he founded his own hedge fund, Paulson & Co. with $2 million and one employee located in office space rented from Bear Stearns on the 26th floor of 277 Park Avenue. The firm moved to 57th and Madison in 2001. By 2003, his fund had grown to $300 million in assets.
Paulson and his company specialize in "event-driven" investments—i.e. in mergers, acquisitions, spin-offs, proxy contests, etc.—and he has made hundreds of such investments throughout his career. Many of the events involved risk arbitrage—which has been described[by whom?] as waiting "until one company announces that it’s buying another, rushing to purchase the target company’s shares, shorting the acquirer’s stock (unless it’s a cash deal), and then earn the differential between the two share prices when the merger closes". An example of proxy event investment Paulson made was during Yahoo’s proxy contest in May 2008, when Carl Icahn launched a proxy fight to try to replace Yahoo's board.
In 2006 Paulson organized a new fund (Paulson Credit Opportunity Fund) betting against bonds backed by subprime mortgages using credit default swaps. Paulson "shot to fame and fortune" when his investment strategies paid off during the subprime housing market crash. His bet against the subprime mortgage bubble has been called "the greatest trade ever" by Gregory Zuckerman who wrote a book by that title about it, but criticized by others. Paulson's involvement in the Abacus deals resulted in Goldman Sachs paying a $550 million penalty, the largest ever paid by a Wall Street firm.
In 2010, he set another hedge fund record by making nearly $5 billion in a single year. However, in 2011, he made losing investments in Bank of America, Citigroup and the fraud-suspected China-based Canadian-listed company, Sino-Forest Corporation. His flagship fund, Paulson Advantage Fund, fell sharply in 2011. Paulson has also become a major investor in gold.
In 2008, Paulson co-wrote a Wall Street Journal op-ed piece suggesting an alternative to the Treasury Secretary's plan for stabilizing the markets, (i.e. recapitalized the troubled financial institutions by spending the $700 billion Troubled Asset Relief Program funds to buy their senior preferred stock rather than their "worst assets").
In 2008 while testifying before US House Committee on Oversight and Government Reform Paulson was asked about the low tax rate on long-term capital gains and carried interest earnings and Paulson replied “I believe our tax situation is fair.” In a 2012 interview with Bloomberg Businessweek magazine he expressed displeasure over the Occupy Wall Street movement and protestors who had picketed his townhouse in 2011 noting:
“We pay a lot of taxes, especially living in New York—there’s an almost 13 percent city and state tax rate. … Most jurisdictions would want to have successful companies like ours located there. I’m sure if we wanted to go to Singapore, they’d roll out the red carpet to attract us.”
At the 2014 Puerto Rico Investment Summit in San Juan, Paulson stated: “Puerto Rico will become the Singapore of the Caribbean. ... Opportunities to buy real estate here won’t last much longer.” Paulson was reportedly investing the territories municipal debt and real estate developments, and was building a home at a resort. (Puerto Rico's economy had shrunk in five of the past seven fiscal years as of 2014.) In June 2014, Bloomberg Businessweek reported Paulson was "spearheading a drive" to convince other wealthy US citizens to move to Puerto Rico, to avoid paying taxes. (Under the new tax laws on the island, individuals pay no local or US federal capital-gains tax, and no local taxes on dividend or interest income for 20 years.)
Between 2009 and 2011 Paulson made several charitable donations, including $15 million to the Center for Responsible Lending, $20 million to New York University Stern School of Business, $15 million to build a children's hospital in Guayaquil, Ecuador, and £2.5 million to the London School of Economics for the John A. Paulson Chair in European Political Economy. In October 2012, Paulson donated $100 million to the Central Park Conservancy, the nonprofit organization that maintains New York City's Central Park on the condition that none of the money be spent on any other city park. In June 2015, Paulson donated $400 million to Harvard University's School of Engineering and Applied Sciences (SEAS), which was the largest gift that Harvard has ever received, causing the engineering school to be renamed the Harvard John A. Paulson School of Engineering and Applied Sciences. The next month, he gifted $8.5 million to New York City's largest charter school organization, Success Academy to improve public education and open up middle schools in the Bedford-Stuyvesant area of Brooklyn and in the Hell's Kitchen area of Manhattan.
Paulson contributed $140,000 to political candidates and parties between 2000 and 2010, 45% of which went to Republicans, 16% to Democrats, and 36% to special interests. House Speaker John Boehner in particular has received contributions from Paulson and Paulson & Co. employees.
In 2011, Paulson donated $1 million to Mitt Romney's Super PAC Restore Our Future. His name and picture were featured in an episode of the Colbert Report, in a segment mock-honoring the 22 largest Super PAC donors. On April 26, 2012, Paulson hosted a fundraiser at his New York townhouse for the GOP presidential candidate Mitt Romney.
In 2000, he married Jenny Zaharia, in an Episcopalian ceremony in Southampton, New York. Jenny was a Romanian immigrant who came to the United States after her brother George, a track star in Romania, defected and moved to Queens. They have two daughters, Giselle and Danielle, and live most of the year in a 28,500-square-foot Upper East Side townhouse on East 86th Street, obtained for $14.7 million in 2004. He also owns a home in Aspen purchased for $24.5 million in 2010 and an estate in Southampton that he bought for $41 million in 2008. Paulson has an older sister named Theodora Bar-El née Paulson, an Israeli biologist.
Paulson rarely gives television interviews and told one interviewer, "I avoid the media."
- John Paulson Family
- Forbes: "The World's Billionaires - John Paulson" March 2014
- McShane, Larry. "John Paulson, hedge fund heavyweight, raked in $5 billion last year, roughly $13.7 million a day". Daily News (New York). January 29, 2011. Retrieved February 24, 2011.
- "The World's Billionaires". Forbes. Retrieved 30 April 2014.
- DE LA MERCED, MICHAEL J. (October 23, 2012). "Central Park Draws a Huge Gift From a Fan in High Finance". New York Times. Retrieved 17 January 2014.
- John Paulson's Very Bad Year By Sheelah Kolhatkar| businessweek.com| 28 June 2012
- Wachtel, Katya (April 4, 2011). "The Top 25 Hedge Fund Earners In 2010". Business Insider. Retrieved August 28, 2014.
- New York Times: "Paid Notice: Deaths PAULSON, ALFRED G." July 25, 2002
- The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History p.16-25 Cite error: Invalid
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- El Universo: "Familia de migrantes con raíces europeas" December 12, 2010 (in Spanish)
- Goldiner, Dave. "Queens-born John Paulson makes fortune on home foreclosures". New York Daily News. January 16, 2008.
- Dion, Don. "Fund Lessons From John Paulson". The STREET. October 10, 2009.
- Ahuja, Maneet. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds. John Wiley & Sons, 2012.
- Zuckerman, Gregory, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson ..., p.21
- Zuckerman, Gregory (2009). The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History. New York: Crown Publishing Group. pp. 32–3. ISBN 978-0-385-52994-5. Retrieved 26 March 2012.
- Checkler, Joseph. "Paulson Hedge Fund to Back Icahn". The Wall Street Journal. May 15, 2008.
- Zuckerman, Gregory (2009). The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History. New York: Crown Publishing Group. pp. 123–4. ISBN 978-0-385-52994-5. Retrieved 25 January 2014.
- Yahoo news Paulson Loses More Sept Fund Now Off 47%, Svea Herbst-Bayliss, Oct 8 2011, Retrieved Oct 2011
- "Top 10 greatest trades of all time". International Business Times. 6 January 2011. Retrieved 26 March 2012.
Paulson does indeed deserve the title of having made the greatest trade ever.
- Zuckerman, Gregory (2009). The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History. New York: Crown Publishing Group. ISBN 978-0-385-52994-5. Retrieved 26 March 2012.
- Corbett, Jeff (Apr 28, 2010). "John Paulson: Goldman Scandal's Real Ringmaster?". real estate aol.com. Retrieved 29 June 2014.
- Taibbi, Matt (April 26, 2010). "Feds vs. Goldman". Rolling Stone. Retrieved 29 June 2014.
- Fiderer, David. "The Moral Compass Missing From The Greatest Trade Ever". Huffington Post. Retrieved 29 June 2014.
- "Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO". www.sec.gov. 15 July 2010. Retrieved 5 June 2015.
Goldman failed to disclose to investors vital information about the CDO, known as ABACUS 2007-AC1, particularly the role that hedge fund Paulson & Co. Inc. played in the portfolio selection process and the fact that Paulson had taken a short position against the CDO.
- Paulson, John. "The Public Deserves a Better Deal". Wall Street Journal. September 26, 2008.
- Burton, Katherine (Apr 25, 2014). "Paulson as Cheerleader for Puerto Rico Sees Rich Influx". Bloomberg. Retrieved 29 June 2014. Cite error: Invalid
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- Kerpen, Phil. "SEC Probe Shouldn't Stop With Goldman Sachs". Fox News. April 20, 2010.
- "Hedge Fund Founder John A. Paulson Gives $20 Million to NYU Stern". New York University Leonard N. Stern School of Business. November 12, 2009.
- Kroll, Luisa."John Paulson Pledges $15 Million In Ecuador". Forbes. November 23, 2010.
- "A $100 Million Thank-You for a Lifetime’s Central Park Memories" New York Times October 23, 2012.
- Park Department takes a Seat Behind Nonprofit Conservancies, by MIchael Powell, 4 February 2014, New York Times
- http://news.harvard.edu/gazette/story/2015/06/harvard-receives-its-largest-gift/?utm_source=SilverpopMailing&utm_medium=email&utm_campaign=SEAS%20Announcement%201015%20version%20%281%29 "Harvard receives its largest gift"
- Lewin, T. John Paulson Gives $400 Million to Harvard for Engineering School, New York Times, June 3, 2015
- Gara, Antoine (30 July 2015). "Hedge Fund Billionaire John Paulson Gives $8.5 Million To Open New Success Academy Schools". forbes.com. Forbes. Retrieved 9 September 2015.
- Campaign Contribution Search: John Paulson. Federal Election Commission data via NEWSMEAT. Retrieved 12 December 2014.
- "Who’s Financing the ‘Super PACs’". New York Times. February 1, 2012.
- "America's Biggest Super PAC Donors" The Colbert Report February 2, 2012.
- Cunningham, Bill (December 14, 2008). "EVENING HOURS; Family Fetes". The New York Times.
- "Jenny Paulson, wealthiest Romanian woman in the world. Her wealth stands at 7 billion dollars". The Bucharest Herald. November 22, 2011. Retrieved 12 December 2014.
- Mr. Paulson's Stock Picks, Market Opinions, & Portfolio Holdings at EyeVest
- Interview: "Excellent timing: Face to Face with John Paulson," (Pensions & Investments)
- "The man who made too much" (Portfolio magazine)
- John Paulson-related articles at The New York Times
- Interview and Profile (Hedge Fund News)
- John Paulson & Co 2011 Year-End Firm Letter
- John Paulson Latest Portfolio Holdings
- Paulson Townhouse By Delano & Aldrich