John Paulson

John Paulson
Born	Alfred Paulson December 14, 1955 (1955-12-14) (age 58) Queens, New York, U.S.
Residence	Manhattan, New York, U.S.[1]
Citizenship	United States
Alma mater	New York University (B.S.) Harvard University (M.B.A.)
Occupation	Founder and President of Paulson & Co.
Net worth	$11.4 billion (September 2013)[1]
Spouse(s)	Jenny Zaharia (<abbr="married">m. 2000)[2]
Children	Giselle Paulson Danielle Paulson
Parents	Jacqueline Boklan Alfredo Guillermo Paulsen

John Alfred Paulson (born December 14, 1955) is an American hedge fund manager 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"^[3] and "a man who made one of the biggest fortunes in Wall Street history".^[4]

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"^[4] by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market. As of September 2013, Forbes estimates his net worth at $11.4 billion.^[5][6]

Early life and education

Paulson was born in 1955 in Queens, New York, the third of four children of Alfred G. Paulson^[7] (November 22, 1924 - July 24, 2002) and Jacqueline Paulson (née Boklan born 1926).^[8]

His father was born Alfredo Guillermo Paulsen in Ecuador to a father of half French and half Norwegian descent and a Ecuadorian mother. Alfredo was orphaned at fifteen and moved to Los Angeles with his younger brother Alberto at age sixteen. 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.^[8][9]

His 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^[8] and later as the CFO at public relations firm Ruder Finn.^[10][11]

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.^[8]

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^[12] 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.^[8]

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.^[8] 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".^[13] In 1978, he graduated valedictorian of his class summa cum laude in finance from New York University's College of Business and Public Administration.^[12] 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.^[12]

Career

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 Sterns 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^[14] 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.^[4]

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 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.^[15]

In 2006 Paulson organized a new fund (Paulson Credit Opportunity Fund) betting against bonds backed by subprime mortgages using Credit Default Swaps.^[16] Paulson "shot to fame and fortune" when his investment strategies paid off during the subprime housing market crash.^[17] 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.^[18][19]

In 2010, he set another hedge fund record by making nearly $5 billion in a single year.^[1] However in 2011, he made losing investments in Bank of America,^[1] Citigroup^[1] and the fraud-suspected China-based Canadian-listed company, Sino-Forest Corporation.^[1] His flagship fund, Paulson Advantage Fund, fell sharply in 2011. Paulson has also become a major investor in gold.^[1]

Views

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.^[20]

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.”^[4] 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^[4] 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.”^[4]

Philanthropy

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.^[21][22][23] 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.^[24][25]

Political contributions

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.^[26] House Speaker John Boehner in particular has received contributions from Paulson and Paulson & Co. employees.^[4]

In 2011, Paulson donated $1 million to Mitt Romney's Super PAC Restore Our Future.^[27] His name and picture were featured in an episode of the Colbert Report, in a segment mock-honoring the 22 largest Super PAC donors.^[28] On April 26, 2012, Paulson hosted a fundraiser at his New York townhouse for the GOP presidential candidate Mitt Romney.^[4]

Personal life

In 2000, he married Jenny Zaharia, in an Episcopalian Church in Southampton, New York.^[8] 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.^[8] They have two daughters, Giselle and Danielle,^[29] 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.^[4] Other homes he owns include one in Aspen purchased for $24.5 million in 2010, an estate in Southampton he bought for $41 million in 2008.^[4][2][30] Paulson has an older sister named Theodora Bar-El née Paulson; PhD, a prominent Israeli biologist.

Paulson has never given a television interview, and told one interviewer “I avoid the media.”^[4]

See also

• Paulson & Co.

References

External links

• 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

Authority control WorldCat VIAF: 100654056 LCCN: n2009055039 ISNI: 0000 0000 7135 8393 GND: 140242597

Persondata
Name	Paulson, John Alfred
Alternative names
Short description	American hedge fund manager
Date of birth	December 14, 1955
Place of birth	Queens, New York, U.S.
Date of death
Place of death