Wikipedia

John Paulson

Not to be confused withJohn Paulsen.

John Alfred Paulson(born December 14, 1955) is an American billionairehedge fund manager.He leadsPaulson & Co.,a New York–based investment management firm he founded in 1994.[1]He has been called "one of the most prominent names in high finance".[2]

John Paulson
Born
John Alfred Paulson

(1955-12-14)December 14, 1955(age 68)
New York City, U.S.
EducationNew York University(BA)
Harvard University(MBA)
Known forFounder ofPaulson & Co.
Political partyRepublican
Spouse
Jenny Zaharia
​
​
(m.2000;sep.2021)​
Children2 daughters

His prominence and fortune were made in 2007 when he earned almost $4 billion and was transformed "from an obscure money manager into a financial legend"[3]by usingcredit default swapsto effectively bet against theU.S. subprime mortgage lending market.In 2010, Paulson earned $4.9 billion.[4]TheForbesreal-time tracker estimated his net worth at $3 billion as of January 2023.[1]

ADonald Trumpsupporter, Paulson was a major donor to Trump's2016,2020,and2024presidential campaigns. Trump has publicly floated Paulson as a potentialSecretary of the Treasuryshould he win the2024 election.[5]

Early life and education

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Paulson was born on December 14, 1955, in Queens, New York, the third of four children of Alfred G. Paulson[6][7][8](1924–2002) and Jacqueline (née Boklan, 1926–2018).[9]

His father was born Alfredo Guillermo Paulsen inEcuadorto a father of halfFrenchand halfNorwegiandescent and anEcuadorianmother. Alfredo was orphaned at fifteen, and at age sixteen moved toLos Angeleswith his younger brother, Alberto. Alfredo enlisted in the U.S. Army, where he served and was wounded in Italy duringWorld War II.He later changed his surname from Paulsen to Paulson.[7][9]

John's mother was the daughter ofJewishimmigrants from Lithuania and Romania who had moved toNew York City.Jacqueline met Alfredo while they both attendedUCLA.They wed and moved to New York City, where Alfredo worked atArthur Andersen[9]and later as the CFO at public-relations firmRuder Finn.[10][11]

Realizing that his previously chosen career path in sales would not provide a steady and secure cash flow, Paulson returned to NYU in 1976, where he began to excel in business studies.[9]In 1978, he graduatedvaledictorianof his classsumma cum laudein finance from New York University's College of Business and Public Administration.[12]He went on toHarvard Business School,on aSidney J. Weinberg/Goldman Sachsscholarship, earning anMBAas a George F. Baker Scholar (top 5 percent of his class) in 1980.[12]

Career

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Paulson began his career atBoston Consulting Groupin 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 withLeon Levy.He moved on toBear Stearnsworking in the mergers and acquisitions department, and then to Gruss Partners LP, where he was a general partner.[13]

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 of277 Park Avenue.The firm moved to 57th and Madison in 2001. By 2003, his fund had grown to $300 million in assets.[3]

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."[3]An example of a proxy event investment Paulson made was during Yahoo's proxy contest in May 2008, whenCarl Icahnlaunched a proxy fight to try to replace Yahoo's board.[15]

In 2010, he set another hedge fund record by making nearly $5 billion in a single year,[1]primarily investing in the gold sector.[16]However, in 2011, he made losing investments inBank 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 ingold.[1]

Subprime mortgage crisis

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Paulson became world-famous in 2007 by shorting the US housing market, as he foresaw thesubprime mortgage crisisand bet againstmortgage-backed securitiesby investing incredit 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.[17]

Paulson worked withGoldman Sachsto provide liquidity for low-performing home loans in Arizona, California, Florida and Nevada. Together, Paulson and Goldman created theAbacus 2007-AC1investment vehicle and kept Paulson's bet against the underlying assets hidden from people who purchased it. Paulson escaped indictment because his firm maintained that it was always transparent about its view of the mortgages that had been securitized and that the assets were not without risk. Goldman was sued by theSecurities and Exchange Commissionand had to reach a settlement for Abacus.[18][19]On July 15, 2010, Goldman settled out of court, agreeing to pay the SEC and investors US$550 million, including $300 million to the U.S. government and $250 million to investors, one of the largest penalties ever paid by a Wall Street firm.[20]

Political and economic views

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Paulson contributed $140,000 to political candidates and parties between 2000 and 2010, 45% of which went toRepublicans,16% toDemocrats,and 36% to special interests,[21]including former House SpeakerJohn Boehner.[3]

In 2008, Paulson co-wrote aWall Street Journalop-ed piece suggesting an alternative to the Treasury Secretary's plan for stabilizing the markets. The alternative plan included recapitalizing the troubled financial institutions by spending the $700 billionTroubled Asset Relief Programfunds to buy their seniorpreferred stockrather than their "worst assets".[22]

In 2008 while testifying beforeUS House Committee on Oversight and Government ReformPaulson was asked about the low tax rate onlong-term capital gainsandcarried interestearnings and Paulson replied "I believe our tax situation is fair."[3]In a 2012 interview with BloombergBusinessweekmagazine he expressed displeasure over theOccupy Wall Streetmovement, saying, "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."[3]

In 2011, Paulson donated $1 million toMitt Romney's Super PACRestore Our Future.[23]On April 26, 2012, Paulson hosted a fund-raiser at his New York townhouse for Romney's presidential candidacy.[3]

At the 2014 Puerto Rico Investment Summit inSan Juan,Paulson stated: "Puerto Ricowill become theSingaporeof the Caribbean. "Paulson was reportedly investing in the territory's municipal debt and real estate developments, and was building a home at a resort.[24]

Donald Trump supporter

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Paulson received media attention when he immediately backedDonald Trumpafter Trump secured theRepublican nominationin2016.[25]Paulson served as one of the top economic advisers to Donald Trump's2016 presidentialcampaign.[26][27]Paulson had established a relationship with Trump prior to the campaign, with Paulson and other investors having sold the Doral Golf Resort & Spa in Trump in 2012.[28]Together with his spouse, Paulson contributed $831,370 toDonald Trump's2020 presidential campaign.[29]

Paulson has been a major fundraiser forDonald Trump's 2024 campaign.[30][31]On April 6, 2024, the Trump campaign self-reported a $50.5 million fundraising haul at John Paulson'sPalm Beachhouse.[32]In March 2024, it was reported that Trump floated Paulson as a potentialSecretary of the Treasuryif he wins the 2024 election.[33]

Wealth and philanthropy

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Between 2009 and 2011 Paulson made several charitable donations, including $15 million to theCenter for Responsible Lending,$20 million toNew York University Stern School of Business(auditorium now named after Paulson), $5 million to theSouthampton Hospitalon Long Island, $15 million to build a children's hospital inGuayaquil,Ecuador,and £2.5 million to theLondon School of Economicsfor the John A. Paulson Chair in European Political Economy.[34][35][36]

In October 2012, Paulson donated $100 million to theCentral Park Conservancy,the nonprofit organization that maintains New York City'sCentral Park.At the time of the donation, the gift represented the largest monetary donation in the history of New York City's park system.[37]In June 2015, Paulson donated $400 million to Harvard University'sSchool 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.[38][39]The next month, he gifted $8.5 million to New York City's largest charter school organization,Success Academy,to change public education and open up middle schools in theBedford-Stuyvesantarea ofBrooklynand in theHell's Kitchenarea ofManhattan.[40]

In 2022,New York Universityannounced that Paulson had donated $100 million towards the cost of a new building in its Washington Square Campus. The building was named the John A. Paulson Center in recognition of the gift.[41]

Personal life

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In 2000, Paulson married Jenny Zaharia in anEpiscopalianceremony inSouthampton, New York;[42]Jenny was aRomanianimmigrant who came to the United States after her brother George, a track star in Romania, defected and moved toQueens.[9]The couple had two daughters[43]and lived most of the year in a 28,500-square-footUpper East Sidetownhouse on East 86th Street, bought in 2004 for $14.7 million.[3]Paulson also owned ahomeinAspen, Colorado,purchased for $24.5 million in 2010 and an estate inSouthamptonthat he bought for $41 million in 2008.[44][3][45]

In 2017, Paulson and his wife wrote a letter to the elite ManhattanSpence School,threatening to withdraw aid if the school continued its "alarming pattern" of "anti-white indoctrination". In the letter, they stated: "In fact for children of all races, we strongly believe that schools should value and define success in terms of hard work, earned accomplishment, merit, a commitment to academic rigor, and personal integrity."[46]

Paulson filed for divorce in September 2021, but later withdrew his divorce action so that both sides could negotiate out of court and away from the media.[47]In 2022, Zaharia sued Paulson for $1 billion in damages.[48]

In 2024, Paulson was reportedly engaged to be married to 35-year-old clinical dietitian Alina de Almeida.[49][50]

John Paulson has an older sister named Theodora Bar-El, an Israeli biologist.

See also

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References

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  1. ^abcdefg"Forbes profile: John Paulson".Forbes.Archivedfrom the original on 3 April 2019.Retrieved22 May2020.
  2. ^DE LA MERCED, MICHAEL J. (October 23, 2012)."Central Park Draws a Huge Gift From a Fan in High Finance".New York Times.Archivedfrom the original on 21 December 2018.Retrieved17 January2014.
  3. ^abcdefghi"John Paulson's Very Bad Year"By Sheelah Kolhatkar| businessweek | 28 June 2012
  4. ^Wachtel, Katya (April 4, 2011)."The Top 25 Hedge Fund Earners In 2010".Business Insider.Archivedfrom the original on September 3, 2014.RetrievedAugust 28,2014.
  5. ^"Trump floats billionaire Paulson as potential Treasury chief, Bloomberg reports".Reuters.2024-03-14.
  6. ^"John Paulson Fast Facts".CNN.April 12, 2020.Archivedfrom the original on 1 July 2020.Retrieved1 July2020.
  7. ^abEl Universo: "Familia de migrantes con raíces europeas"Archived2014-02-19 at theWayback MachineDecember 12, 2010 (in Spanish)
  8. ^New York Times: "Paid Notice: Deaths PAULSON, ALFRED G."Archived2016-03-05 at theWayback MachineJuly 25, 2002
  9. ^abcdeThe Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial HistoryArchived2014-10-23 at theWayback Machinep.16-25
  10. ^Goldiner, Dave."Queens-born John Paulson makes fortune on home foreclosures"Archived2009-01-29 at theWayback Machine.New York Daily News.January 16, 2008.
  11. ^Dion, Don."Fund Lessons From John Paulson"Archived2012-10-05 at theWayback Machine.The STREET.October 10, 2009.
  12. ^abAhuja, Maneet.The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds.John Wiley & Sons, 2012.
  13. ^"John Paulson".CNBC. 2 July 2013.Retrieved23 January2023.
  14. ^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.ISBN978-0-385-52994-5.
  15. ^Checkler, Joseph."Paulson Hedge Fund to Back Icahn"Archived2017-08-12 at theWayback Machine.The Wall Street Journal.May 15, 2008.
  16. ^"How John Paulson Became a Billionaire in the Stock Market - GuruFocus".gurufocus.Archivedfrom the original on 2017-11-21.Retrieved2020-04-27.
  17. ^"Economy's Loss Was One Man's Gain".New York Times.5 December 2009.Retrieved10 October2023.
  18. ^"Securities and Exchange Commission vs Goldman Sachs & Co & Fabrice Tourre, Complaint (Securities Fraud)"(PDF).U.S. Securities and Exchange Commission.April 16, 2010.Archived(PDF)from the original on May 20, 2010.RetrievedApril 17,2010.
  19. ^"John A. Paulson Is Not Target of S.E.C. Inquiry",Dealbook.New York Times.April 17, 2010.
  20. ^"Goldman Settles With S.E.C. for $550 Million".The New York Times.No. DealBook. United States. The New York Times Company. July 15, 2010.Archivedfrom the original on July 8, 2017.RetrievedMay 18,2017.
  21. ^Campaign Contribution Search: John Paulson.Federal Election Commission data viaNEWSMEAT.Retrieved 12 December 2014.
  22. ^Paulson, John."The Public Deserves a Better Deal"Archived2017-08-12 at theWayback Machine.Wall Street Journal.September 26, 2008.
  23. ^"Who’s Financing the ‘Super PACs’"Archived2017-02-24 at theWayback Machine.New York Times.February 1, 2012.
  24. ^Burton, Katherine (Apr 25, 2014)."Paulson as Cheerleader for Puerto Rico Sees Rich Influx".Bloomberg.Archivedfrom the original on 2014-06-24.Retrieved29 June2014.
  25. ^Levin, Bess (21 November 2016)."Hedge-Fund Manager John Paulson Got Trump Elected, and Now He's Got a Favor to Ask".The Hive.Archivedfrom the original on 2016-11-23.Retrieved2017-02-15.
  26. ^Tankersley, Jim (5 August 2016)."Donald Trump's new team of billionaire advisers could threaten his populist message".Washington Post.Archivedfrom the original on 5 August 2016.Retrieved6 August2016.
  27. ^Byrne, Brendan (7 August 2016)."Trump Names Economic Team, Includes John Paulson, No Carl Icahn".ValueWalk.Retrieved9 August2016.
  28. ^Light, Joe (2016-11-21)."Paulson's Bet on Trump Yields Power and Profit".Bloomberg.Archivedfrom the original on 2017-02-16.Retrieved2017-02-15.
  29. ^"Here Are The Billionaires Who Donated To Donald Trump's 2020 Presidential Campaign".Forbes.Retrieved27 March2024.
  30. ^"Billionaires Lutnick, Paulson to Host Fundraiser for Trump in NY".Bloomberg News.2024.
  31. ^"Billionaire John Paulson to hold megadonor fundraiser for Donald Trump".ft.Retrieved2024-05-10.
  32. ^Gold, Michael (April 6, 2024)."Trump Fund-Raiser Rakes In More Than $50.5 Million, Campaign Says".The New York Times.ISSN0362-4331.Archivedfrom the original on May 22, 2024.RetrievedMay 23,2024.
  33. ^Leary, Alex; Restuccia, Andrew; Lombardo, Cara (2024-04-01)."Trump Eyes High-Profile Wall Street, D.C. Veterans for Treasury Secretary".The Wall Street Journal.Retrieved2024-06-02.
  34. ^Kerpen, Phil."SEC Probe Shouldn't Stop With Goldman Sachs"Archived2010-04-23 at theWayback Machine.Fox News. April 20, 2010.
  35. ^"Hedge Fund Founder John A. Paulson Gives $20 Million to NYU Stern"Archived2010-11-27 at theWayback Machine.New York University Leonard N. Stern School of Business. November 12, 2009.
  36. ^Kroll, Luisa."John Paulson Pledges $15 Million In Ecuador".Forbes.November 23, 2010.
  37. ^"A $100 Million Thank-You for a Lifetime’s Central Park Memories"Archived2017-02-16 at theWayback MachineNew York TimesOctober 23, 2012.
  38. ^"Harvard receives its largest gift".June 3, 2015.Archivedfrom the original on September 22, 2019.RetrievedSeptember 22,2019.
  39. ^Lewin, Tamar (June 3, 2015)."John Paulson Gives $400 Million to Harvard for Engineering School".The New York Times.Archivedfrom the original on February 28, 2017.RetrievedFebruary 17,2017.
  40. ^Gara, Antoine (30 July 2015)."Hedge Fund Billionaire John Paulson Gives $8.5 Million To Open New Success Academy Schools".Forbes.Retrieved9 September2015.
  41. ^"NYU Receives $100 Million Gift from Alumnus John Paulson".
  42. ^The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial HistoryArchived2014-10-23 at theWayback Machinepp. 35-38.
  43. ^Cunningham, Bill (December 14, 2008)."EVENING HOURS; Family Fetes"Archived2017-02-20 at theWayback Machine.The New York Times.
  44. ^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.
  45. ^"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.
  46. ^"Billionaire John Paulson rips elite Spence school for 'anti-white indoctrination'".New York Post.2020-07-08.Retrieved2020-07-08.
  47. ^"Billionaire John Paulson's wife found out about divorce from media".Fox Business.5 October 2021.
  48. ^McCabe, Caitlin (16 November 2023)."Puerto Rico Was Supposed to Be John Paulson's Paradise. Then Came the Lawsuits".WSJ.Retrieved14 May2024.
  49. ^Bradley, Faye (14 April 2024)."Who is billionaire Trump mega donor John Paulson's fiancée, Alina de Almeida?".South China Morning Post.Retrieved17 May2024.
  50. ^Gordon, Amanda."Billionaire John Paulson Explains Why He's Raising $43 Million for Trump".bloomberg.Retrieved17 May2024.

Further reading

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  • Welling, Kate; Gabelli, Mario (2018).Merger Masters: Tales of Arbitrage.New York: Columbia University Press. pp. 99–108.ISBN978-0-231-19042-8.
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