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.
He has been called "one of the most prominent names in high finance"
and "a man who made one of the biggest fortunes in Wall Street history."
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"
by using credit default swaps
to effectively bet against the U.S. subprime mortgage lending market
. In 2010, Paulson earned $4.9 billion.
real-time tracker estimated his net worth at $4.2 billion as of May 2020.
Early life and education
Paulson was born on December 14, 1955, in Queens, New York, the third of four children of Alfred G. Paulson
(1924–2002) and Jacqueline (née Boklan, 1926–2018).
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.
John's mother was the daughter of Jewish
immigrants from Lithuania and Romania who had moved to New York City
. Jacqueline met Alfredo while they both attended UCLA
. They wed and moved to New York City, where Alfredo worked at Arthur Andersen
and later as the CFO at public relations firm Ruder Finn
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.
In 1978, he graduated valedictorian
of his class summa cum laude
in finance from New York University's College of Business and Public Administration.
He went on to Harvard Business School
, on a Sidney J. Weinberg
scholarship, earning an MBA
as a George F. Baker Scholar (top 5 percent of his class) in 1980.
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,
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.
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."
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.
In 2010, he set another hedge fund record by making nearly $5 billion in a single year,
primarily investing in the gold sector.
However, in 2011, he made losing investments in Bank of America
and the fraud-suspected China-based Canadian-listed company, Sino-Forest Corporation
His flagship fund, Paulson Advantage Fund, fell sharply in 2011. Paulson has also become a major investor in gold
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,
including former House Speaker John Boehner.
In 2011, Paulson donated $1 million to Mitt Romney
's Super PAC Restore Our Future
On April 26, 2012, Paulson hosted a fundraiser at his New York townhouse for Romney's presidential candidacy.
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".
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.
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.
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
, and £2.5 million to the London School of Economics
for the John A. Paulson Chair in European Political Economy.
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.
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
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.
In 2017, Paulson and his wife wrote a letter to the elite Manhattan school Spence, 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."
In 2000, he married Jenny Zaharia, in an Episcopalian
ceremony in Southampton, New York
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
They have two daughters, Giselle and Danielle,
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.
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.
Paulson has an older sister named Theodora Bar-El, an Israeli biologist.
Paulson rarely gives television interviews and told one interviewer, "I avoid the media."
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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
Last edited on 27 March 2021, at 17:31
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