John Paulson – Billionaire
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. 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” personally 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. The Forbes real-time tracker estimated his net worth at $8.6 billion as of November 2016.
Early life and education
Paulson was born in 1955 in Queens, New York, the third of four children of Alfred G. Paulson (November 22, 1924 – July 24, 2002) and Jacqueline (née Boklan, born 1926).
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 Alfred while they both attended UCLA. They wed and moved to New York City where Alfred worked at Arthur Andersen and later as the CFO at public relations firm Ruder Finn.
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. 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/Goldman Sachs scholarship, earning an MBA as a George F. Baker Scholar (top 5 percent of his class) in 1980.
Investment 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, 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 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. However, in 2011, he made losing investments in Bank of America, Citigroup 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.
Source:wikipedia