The Business On... John Paulson, President, Paulson & Co
Thursday 09 September 2010
The hedge fund manager with the Midas touch?
Or so you thought. In fact, after several years in which it seemed Mr Paulson could do no wrong, his hedge fund company is experiencing a challenging year.
Returns are down, you mean?
Worse, Mr Paulson's funds have actually been losing money. His flagship, the $9bn Advantage Plus fund lost almost 7 per cent of its value during the second quarter and then dropped another 4 per cent last month. The $3bn Recovery fund is doing even worse – it was off almost 10 per cent in August after a 13 per cent loss in the second quarter.
What's gone wrong?
It seems the great man's judgement is not infallible after all. Mr Paulson shot to fame in 2007 when he made billions of dollars betting on the credit crisis before most people saw it coming. He netted a second fortune last year when his funds gambled on the US to recover. However, fresh reverses in the American housing market and wider economy of late seem to have caught him on the hop.
What does he say for himself?
Not a lot. Mr Paulson never gives interviews and rarely makes public appearances – he is even said to have an application written into his emails to prevent them being forwarded.
Can he turn things around?
His record remains outstanding. Mr Paulson is certainly smart enough – he won a string of academic awards from colleges such as Harvard.
But not everyone will be sorry to see him down?
It's fair to say Mr Paulson's very public success has prompted a backlash in certain quarters. He spent some uncomfortable hours giving evidence to Congress last year, with one politician accusing him of having "more money than God".
The politics of envy?
Maybe, and Mr Paulson has never felt the need to apologise for his wealth, even to Congress. Anyway, this year's disappointments are small beer: he remains astonishingly rich. Last year's payday was a cool $2.3bn.
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