Wikipedia

John Paulson

Not to be confused with John Paulsen.

John Alfred Paulson (born December 14, 1955) is an American billionaire hedge fund manager. He leads Paulson & 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 of Paulson & Co.
Political partyRepublican
Spouse
Jenny Zaharia
​
​
(m. 2000; sep. 2021)​
Children2 daughters

He acquired much of his fortune in 2007 when he earned almost $4 billion and was transformed "from an obscure money manager into a financial legend"[3] by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market. In 2010, Paulson earned $4.9 billion.[4] The Forbes real-time tracker estimated his net worth at $3 billion as of January 2023.[1]

A Donald Trump supporter, Paulson was a major donor to Trump's 2016, 2020, and 2024 presidential campaigns. Trump has publicly floated Paulson as a potential Secretary of the Treasury following his victory in the 2024 election.[5]

Early life and education

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Paulson was born on December 14, 1955, in Queens, New York City, 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 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 U.S. Army, where he served and was wounded in Italy during World War II. He later changed his surname from Paulsen to Paulson.[7][9]

John's mother, Jacqueline, was the daughter of Jewish immigrants from Lithuania and Romania who had moved to New York City. She met Alfredo while they both attended UCLA. They wed and moved to New York City, where Alfredo worked at Arthur Andersen[9] and later as the CFO at public-relations firm Ruder Finn.[10][11]

After dropping out of college then realizing that his previously chosen career path in sales would not provide a steady and secure cash flow, John Paulson returned to NYU in 1976, where he began to excel in business studies.[9] 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

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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 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 of 277 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, when Carl Icahn launched 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 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]

Subprime mortgage crisis

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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.[17]

Paulson worked with Goldman Sachs to provide liquidity for low-performing home loans in Arizona, California, Florida and Nevada. Together, Paulson and Goldman created the Abacus 2007-AC1 investment 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 the Securities and Exchange Commission and 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 to Republicans, 16% to Democrats, and 36% to special interests,[21] including former House Speaker John Boehner.[3]

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. The alternative plan included recapitalizing 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".[22]

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."[3] In a 2012 interview with Bloomberg Businessweek magazine he expressed displeasure over the Occupy Wall Street movement, 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 to Mitt Romney's Super PAC Restore 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 in San Juan, Paulson stated: "Puerto Rico will become the Singapore of 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 backed Donald Trump after Trump secured the Republican nomination in 2016.[25] Paulson served as one of the top economic advisers to Donald Trump's 2016 presidential campaign.[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 to Donald Trump's 2020 presidential campaign.[29]

Paulson has been a major fundraiser for Donald Trump's 2024 campaign.[30][31] On April 6, 2024, the Trump campaign self-reported a $50.5 million fundraising haul at John Paulson's Palm Beach house.[32] In March 2024, it was reported that Trump floated Paulson as a potential Secretary of the Treasury if 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 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.[34][35][36]

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.[37] 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.[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 the Bedford-Stuyvesant area of Brooklyn and in the Hell's Kitchen area of Manhattan.[40]

In 2022, New York University announced 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]

In 2024, the Hebrew University of Jerusalem awarded Paulson an honorary doctorate in recognition of his extensive philanthropic contributions to Israeli cultural and educational institutions. His support for Israeli initiatives includes a $27 million commitment to establish the Paulson Bar-El Building for Computer Science and Engineering at Hebrew University. Paulson also contributed significantly to the Tel Aviv Museum of Art in 2021 to celebrate the museum's 90th anniversary and has supported the Jerusalem Campus for the Arts.[42]

Personal life

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In 2000, Paulson married Jenny Zaharia in an Episcopalian ceremony in Southampton, New York;[43] 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.[9] The couple had two daughters[44] and lived most of the year in a 28,500-square-foot Upper East Side townhouse on East 86th Street, bought in 2004 for $14.7 million.[3] Paulson also owned a home in Aspen, Colorado, purchased for $24.5 million in 2010 and an estate in Southampton that he bought for $41 million in 2008.[45][3][46]

In 2017, Paulson and his wife wrote a letter to the elite Manhattan Spence 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."[47]

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.[48] In 2022, Zaharia sued Paulson for $1 billion in damages.[49]

In 2024, Paulson was reportedly engaged to be married to 35-year-old clinical dietitian Alina de Almeida.[50][51]

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. ^ a b c d e f g "Forbes profile: John Paulson". Forbes. Archived from the original on April 3, 2019. Retrieved May 22, 2020.
  2. ^ DE LA MERCED, MICHAEL J. (October 23, 2012). "Central Park Draws a Huge Gift From a Fan in High Finance". New York Times. Archived from the original on December 21, 2018. Retrieved January 17, 2014.
  3. ^ a b c d e f g h i "John Paulson's Very Bad Year" By Sheelah Kolhatkar| businessweek.com| June 28, 2012
  4. ^ Wachtel, Katya (April 4, 2011). "The Top 25 Hedge Fund Earners In 2010". Business Insider. Archived from the original on September 3, 2014. Retrieved August 28, 2014.
  5. ^ "Trump floats billionaire Paulson as potential Treasury chief, Bloomberg reports". Reuters. March 14, 2024.
  6. ^ "John Paulson Fast Facts". CNN. April 12, 2020. Archived from the original on July 1, 2020. Retrieved July 1, 2020.
  7. ^ a b El Universo: "Familia de migrantes con raíces europeas" Archived February 19, 2014, at the Wayback Machine December 12, 2010 (in Spanish)
  8. ^ New York Times: "Paid Notice: Deaths PAULSON, ALFRED G." Archived March 5, 2016, at the Wayback Machine July 25, 2002
  9. ^ a b c d e The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History Archived October 23, 2014, at the Wayback Machine p.16-25
  10. ^ Goldiner, Dave. "Queens-born John Paulson makes fortune on home foreclosures" Archived January 29, 2009, at the Wayback Machine. New York Daily News. January 16, 2008.
  11. ^ Dion, Don. "Fund Lessons From John Paulson" Archived October 5, 2012, at the Wayback Machine. The STREET. October 10, 2009.
  12. ^ a b Ahuja, Maneet. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds. John Wiley & Sons, 2012.
  13. ^ "John Paulson". CNBC. July 2, 2013. Retrieved January 23, 2023.
  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 City: Crown Publishing Group. pp. 32–3. ISBN 978-0-385-52994-5.
  15. ^ Checkler, Joseph. "Paulson Hedge Fund to Back Icahn" Archived August 12, 2017, at the Wayback Machine. The Wall Street Journal. May 15, 2008.
  16. ^ "How John Paulson Became a Billionaire in the Stock Market - GuruFocus.com". www.gurufocus.com. Archived from the original on November 21, 2017. Retrieved April 27, 2020.
  17. ^ "Economy's Loss Was One Man's Gain". New York Times. December 5, 2009. Retrieved October 10, 2023.
  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. Retrieved April 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. Archived from the original on July 8, 2017. Retrieved May 18, 2017.
  21. ^ Campaign Contribution Search: John Paulson. Federal Election Commission data via NEWSMEAT. Retrieved December 12, 2014.
  22. ^ Paulson, John. "The Public Deserves a Better Deal" Archived August 12, 2017, at the Wayback Machine. Wall Street Journal. September 26, 2008.
  23. ^ "Who’s Financing the ‘Super PACs’" Archived February 24, 2017, at the Wayback Machine. New York Times. February 1, 2012.
  24. ^ Burton, Katherine (April 25, 2014). "Paulson as Cheerleader for Puerto Rico Sees Rich Influx". Bloomberg. Archived from the original on June 24, 2014. Retrieved June 29, 2014.
  25. ^ Levin, Bess (November 21, 2016). "Hedge-Fund Manager John Paulson Got Trump Elected, and Now He's Got a Favor to Ask". The Hive. Archived from the original on November 23, 2016. Retrieved February 15, 2017.
  26. ^ Tankersley, Jim (August 5, 2016). "Donald Trump's new team of billionaire advisers could threaten his populist message". Washington Post. Archived from the original on August 5, 2016. Retrieved August 6, 2016.
  27. ^ Byrne, Brendan (August 7, 2016). "Trump Names Economic Team, Includes John Paulson, No Carl Icahn". ValueWalk. Retrieved August 9, 2016.
  28. ^ Light, Joe (November 21, 2016). "Paulson's Bet on Trump Yields Power and Profit". Bloomberg.com. Archived from the original on February 16, 2017. Retrieved February 15, 2017.
  29. ^ "Here Are The Billionaires Who Donated To Donald Trump's 2020 Presidential Campaign". Forbes. Retrieved March 27, 2024.
  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". www.ft.com. Retrieved May 10, 2024.
  32. ^ Gold, Michael (April 6, 2024). "Trump Fund-Raiser Rakes In More Than $50.5 Million, Campaign Says". The New York Times. ISSN 0362-4331. Archived from the original on May 22, 2024. Retrieved May 23, 2024.
  33. ^ Leary, Alex; Restuccia, Andrew; Lombardo, Cara (April 1, 2024). "Trump Eyes High-Profile Wall Street, D.C. Veterans for Treasury Secretary". The Wall Street Journal. Retrieved June 2, 2024.
  34. ^ Kerpen, Phil. "SEC Probe Shouldn't Stop With Goldman Sachs" Archived April 23, 2010, at the Wayback Machine. Fox News. April 20, 2010.
  35. ^ "Hedge Fund Founder John A. Paulson Gives $20 Million to NYU Stern" Archived November 27, 2010, at the Wayback 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" Archived February 16, 2017, at the Wayback Machine New York Times October 23, 2012.
  38. ^ "Harvard receives its largest gift". June 3, 2015. Archived from the original on September 22, 2019. Retrieved September 22, 2019.
  39. ^ Lewin, Tamar (June 3, 2015). "John Paulson Gives $400 Million to Harvard for Engineering School". The New York Times. Archived from the original on February 28, 2017. Retrieved February 17, 2017.
  40. ^ Gara, Antoine (July 30, 2015). "Hedge Fund Billionaire John Paulson Gives $8.5 Million To Open New Success Academy Schools". Forbes. Retrieved September 9, 2015.
  41. ^ "NYU Receives $100 Million Gift from Alumnus John Paulson".
  42. ^ "Hebrew U confers honorary doctorate degree on John Paulson". Jewish News Syndicate. June 21, 2024. Retrieved October 30, 2024.
  43. ^ The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History Archived October 23, 2014, at the Wayback Machine pp. 35-38.
  44. ^ Cunningham, Bill (December 14, 2008). "EVENING HOURS; Family Fetes" Archived February 20, 2017, at the Wayback Machine. The New York Times.
  45. ^ 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.
  46. ^ "Jenny Paulson, wealthiest Romanian woman in the world. Her wealth stands at 7 billion dollars". The Bucharest Herald. November 22, 2011. Retrieved December 12, 2014.
  47. ^ "Billionaire John Paulson rips elite Spence school for 'anti-white indoctrination'". New York Post. July 8, 2020. Retrieved July 8, 2020.
  48. ^ "Billionaire John Paulson's wife found out about divorce from media". Fox Business. October 5, 2021.
  49. ^ McCabe, Caitlin (November 16, 2023). "Puerto Rico Was Supposed to Be John Paulson's Paradise. Then Came the Lawsuits". WSJ. Retrieved May 14, 2024.
  50. ^ Bradley, Faye (April 14, 2024). "Who is billionaire Trump mega donor John Paulson's fiancée, Alina de Almeida?". South China Morning Post. Retrieved May 17, 2024.
  51. ^ Gordon, Amanda. "Billionaire John Paulson Explains Why He's Raising $43 Million for Trump". www.bloomberg.com. Retrieved May 17, 2024.

Further reading

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  • Welling, Kate; Gabelli, Mario (2018). Merger Masters: Tales of Arbitrage. New York: Columbia University Press. pp. 99–108. ISBN 978-0-231-19042-8.
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