John Paulson

John Paulson
Born John Alfred Paulson
December 14, 1955 (1955-12-14) (age 62)
New York City, New York, U.S.
Residence New York City, New York, U.S.
Citizenship United States
Alma mater New York University
Harvard University
Known for Founding and leading Paulson & Co.
Net worth DecreaseUS$6.2 billion (June 2018)[1]
Political party Republican
Spouse(s) Jenny Zaharia (m. 2000)[2]
Children Giselle Paulson
Danielle Paulson
Parent(s) Jacqueline Boklan
Alfred G. Paulson

John Alfred Paulson (born December 14, 1955) is an American investor, hedge fund manager and philanthropist. He leads Paulson & Co., a New York-based investment management firm he founded in 1994.[3] He has been called "one of the most prominent names in high finance"[4] and "a man who made one of the biggest fortunes in Wall Street history".[5]

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"[5] by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market. In 2010, Paulson earned $4.9 billion.[6] The Forbes real-time tracker estimated his net worth at $7.8 billion as of December 2017.[7]

Early life and education

Paulson was born in 1955 in Queens, New York, the third of four children of Alfred G. Paulson[8][9][10] (November 22, 1924 - July 24, 2002) and Jacqueline (née Boklan, born 1926).[11]

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.[9][11]

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[11] and later as the CFO at public relations firm Ruder Finn.[12][13]

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.[11] In 1978, he graduated valedictorian of his class summa cum laude in finance from New York University's College of Business and Public Administration.[14] 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.[14]

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 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,[15] 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.[5]

Paulson became world-famous in 2007 by shorting the US housing market, as he foresaw the subprime mortgage crisis and bet against mortgage backed securities by investing in credit default swaps. Sometimes referred to as the greatest trade in history, Paulson's firm made a fortune and he earned over $4 billion personally on this trade alone.

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 merger 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".[5] 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.[16]

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]

Political and economic views

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,[17] including former House Speaker John Boehner.[5]

In 2011, Paulson donated $1 million to Mitt Romney's Super PAC Restore Our Future.[18] On April 26, 2012, Paulson hosted a fundraiser at his New York townhouse for Romney's presidential candidacy.[5]

Paulson received media attention after immediately backing Trump after he secured the GOP nomination.[19][20] Paulson served as one of the top economic advisers to Donald Trump's 2016 presidential campaign.[21][22]

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").[23]

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."[5] In a 2012 interview with Bloomberg Businessweek magazine he expressed displeasure over the Occupy Wall Street movement[5] 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.[5]

At the 2014 Puerto Rico Investment Summit in San Juan, Paulson stated: "Puerto Rico will become the Singapore of the Caribbean." Paulson was reportedly investing the territories municipal debt and real estate developments, and was building a home at a resort.[24]

Wealth and 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 (auditorium now named after Paulson), $5 million to the Southampton Hospital on Long Island, $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.[25][26][27] In October 2012, Paulson donated $100 million to the Central Park Conservancy, the nonprofit organization that maintains New York City's Central Park. At the time of the donation, the gift represented the largest monetary donation in the history of New York City's park system.[28] In June 2015, Paulson donated $400 million to Harvard University's School of Engineering and Applied Sciences (SEAS), the largest gift received in the university's history. Following the donation, the engineering school was renamed the Harvard John A. Paulson School of Engineering and Applied Sciences.[29][30] 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.[31]

Personal life

In 2000, he married Jenny Zaharia, in an Episcopalian ceremony in Southampton, New York.[32] 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.[11] They have two daughters, Giselle and Danielle,[33] 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.[5] 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.[2][5][34] Paulson has an older sister named Theodora Bar-El, an Israeli biologist.[35]

Paulson rarely gives television interviews and told one interviewer, "I avoid the media."[5]

See also

References

  1. 1 2 3 4 5 6 Forbes: "The World's Billionaires - John Paulson" December 2017
  2. 1 2 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.
  3. ↑ "The World's Billionaires". Forbes. Retrieved 30 April 2014.
  4. ↑ 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.
  5. 1 2 3 4 5 6 7 8 9 10 11 12 John Paulson's Very Bad Year By Sheelah Kolhatkar| businessweek.com| 28 June 2012
  6. ↑ Wachtel, Katya (April 4, 2011). "The Top 25 Hedge Fund Earners In 2010". Business Insider. Retrieved August 28, 2014.
  7. ↑ https://www.forbes.com/profile/john-paulson/
  8. ↑ John Paulson Family
  9. 1 2 El Universo: "Familia de migrantes con raíces europeas" December 12, 2010 (in Spanish)
  10. ↑ New York Times: "Paid Notice: Deaths PAULSON, ALFRED G." July 25, 2002
  11. 1 2 3 4 5 The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History p.16-25
  12. ↑ Goldiner, Dave. "Queens-born John Paulson makes fortune on home foreclosures". New York Daily News. January 16, 2008.
  13. ↑ Dion, Don. "Fund Lessons From John Paulson". The STREET. October 10, 2009.
  14. 1 2 Ahuja, Maneet. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds. John Wiley & Sons, 2012.
  15. ↑ 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.
  16. ↑ Checkler, Joseph. "Paulson Hedge Fund to Back Icahn". The Wall Street Journal. May 15, 2008.
  17. ↑ Campaign Contribution Search: John Paulson. Federal Election Commission data via NEWSMEAT. Retrieved 12 December 2014.
  18. ↑ "Who’s Financing the ‘Super PACs’". New York Times. February 1, 2012.
  19. ↑ "Paulson's Bet on Trump Yields Power and Profit". Bloomberg.com. 2016-11-21. Retrieved 2017-02-15.
  20. ↑ Levin, Bess. "Hedge-Fund Manager John Paulson Got Trump Elected, and Now He's Got a Favor to Ask". The Hive. Retrieved 2017-02-15.
  21. ↑ Tankersley, Jim (5 August 2016). "Donald Trump's new team of billionaire advisers could threaten his populist message". Washington Post. Retrieved 6 August 2016.
  22. ↑ Byrne, Brendan. "Trump Names Economic Team, Includes John Paulson, No Carl Icahn". ValueWalk. Retrieved 9 August 2016.
  23. ↑ Paulson, John. "The Public Deserves a Better Deal". Wall Street Journal. September 26, 2008.
  24. ↑ Burton, Katherine (Apr 25, 2014). "Paulson as Cheerleader for Puerto Rico Sees Rich Influx". Bloomberg. Retrieved 29 June 2014.
  25. ↑ Kerpen, Phil. "SEC Probe Shouldn't Stop With Goldman Sachs". Fox News. April 20, 2010.
  26. ↑ "Hedge Fund Founder John A. Paulson Gives $20 Million to NYU Stern". New York University Leonard N. Stern School of Business. November 12, 2009.
  27. ↑ Kroll, Luisa."John Paulson Pledges $15 Million In Ecuador". Forbes. November 23, 2010.
  28. ↑ "A $100 Million Thank-You for a Lifetime’s Central Park Memories" New York Times October 23, 2012.
  29. ↑ http://news.harvard.edu/gazette/story/2015/06/harvard-receives-its-largest-gift/ "Harvard receives its largest gift"
  30. ↑ Lewin, T. John Paulson Gives $400 Million to Harvard for Engineering School, New York Times, June 3, 2015
  31. ↑ 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.
  32. ↑ The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History pp. 35-38.
  33. ↑ Cunningham, Bill (December 14, 2008). "EVENING HOURS; Family Fetes". The New York Times.
  34. ↑ "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.
  35. ↑ Paulson family
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