John Paulson: Big Money from the Big Short
His friends call him “J.P.,” while others call him “one of the most prominent names in high finance.” No matter what you choose to call him, John Paulson’s impact on the financial landscape remains undeniable.
Queens native John Alfred Paulson is now worth $6.2 billion, his fortune having been made betting against subprime mortgages at the peak of the 2007 credit bubble. His hedge fund firm, Paulson & Co., was started in 1994 and was a niche fund until Mr. Paulson put on his hugely successful “big short.”
Many years earlier, in 1978, John Paulson graduated summa cum laude in Finance from New York University’s College of Business and Public Administration. John then earned his Masters of Business Administration with high distinction, as a Baker Scholar (in the top 5 percent of his class), in 1980 from Harvard Business School. Prior to forming Paulson and Co., John Paulson was a general partner of Gruss Partners and a managing director in mergers and acquisitions at Bear Stearns.
2007 was most definitely a banner year for John, as that was when he earned almost $4 billion using credit default swaps to bet against the U.S. subprime mortgage lending market. This catapulted John Paulson from the status of obscure money manager to financial legend, but he was no flash in the pan: Mr. Paulson also earned another $4.9 billion in 2010.
As an alternative investment management firm, Paulson & Co. specializes in “event-driven investing” that includes merger arbitrage, bankruptcy reorganizations and distressed credit, structured credit, recapitalizations, restructurings, and other corporate events. In addition to its hedge funds, Paulson & Co. manages real-estate private-equity funds which focus on various types of distressed real-estate recovery opportunities.
At their peak, John Paulson’s hedge funds managed $36 billion in assets; in March of 2018, Forbes announced that John was tied for number 261 on its World’s Billionaires list. Also notable was the announcement, made on August 5, 2016, that John Paulson would be one of then presidential candidate Donald Trump’s economic advisers.
John serves on a number of boards, including the Board of Trustees of New York University; Board of Trustees of the Central Park Conservancy; the Dean’s Advisory Board of the Harvard Business School; the Board of Directors of the 92nd Street Y; the Board of the Partnership for New York City; and the Chairman’s Circle of the Metropolitan Museum of Art.
Mr. Paulson also has a history of philanthropy, having made substantial donations to, among others, the Center for Responsible Lending, $20 million to New York University Stern School of Business, New York’s Southampton Hospital, and the Central Park Conservancy.
Knowing when to go short is an art form that few have mastered. For John Paulson, former obscure money manager, the undisputed consensus is that he has profited from his art quite nicely.