John Paulson

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John Paulson
BornAlfred Paulson
December 14, 1955 (1955-12-14) (age 58)
Queens, New York, U.S.
ResidenceManhattan, New York, U.S.[1]
CitizenshipUnited States
Alma materNew York University (B.S.)
Harvard University (MBA)
OccupationFounder and President of Paulson & Co.
Net worthDecrease $11.2 billion (March 2013)[1]
Spouse(s)Jenny Zaharia(m. 2000)[2]
ChildrenGiselle Paulson
Danielle Paulson
ParentsJacqueline Boklan
Alfredo Guillermo Paulsen
 
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John Paulson
BornAlfred Paulson
December 14, 1955 (1955-12-14) (age 58)
Queens, New York, U.S.
ResidenceManhattan, New York, U.S.[1]
CitizenshipUnited States
Alma materNew York University (B.S.)
Harvard University (MBA)
OccupationFounder and President of Paulson & Co.
Net worthDecrease $11.2 billion (March 2013)[1]
Spouse(s)Jenny Zaharia(m. 2000)[2]
ChildrenGiselle Paulson
Danielle Paulson
ParentsJacqueline Boklan
Alfredo Guillermo Paulsen

John Alfred Paulson (born December 14, 1955) is an American hedge fund manager, investor, and philanthropist. He is the founder and president of Paulson & Co., a New York-based hedge fund.

Paulson became a billionaire by short-selling subprime mortgages in 2007 and made $3.7 billion that year.[1] In 2010, he beat a hedge-fund record by making nearly $5 billion. His fortune was made largely from the collapse of mortgage backed securities market.[1]

In 2011, he made losing trades 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, was down over 40% as of September 2011. During that same time, Paulson had invested most of his personal fortune in gold, and it had grown by $3.1 billion from September 2010 to September 2011.[1]

Early life and education[edit]

Paulson was born in 1955 in Queens, New York, the son of Alfred G. Paulson (November 22, 1924 - July 24, 2002) and Jacqueline Paulson (née Boklan born 1926).[3]

His father was born Alfredo Guillermo Paulsen in Ecuador to Alfredo Paulsen Moulis, who served as governor of Guayas Province, and Zoila María Andrade. Alfredo's father was of half French and half Norwegian descent while his mother was Ecuadorian. Alfredo was orphaned at fifteen and moved to Los Angeles with his younger brother Alberto at age sixteen. He did odd jobs for several years and then enlisted in the Army where he served and was wounded in Italy during World War II. He later changed his surname from Paulsen to Paulson.[3][4]

His 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[3] and later as the CFO at public relations firm Ruder Finn.[5][6] John was the third of four children born to the couple (Theodora, William, John and Julia).[7]

John grew up in the Le Havre apartment complex in Queens, a thirty-two-building, 1,021-apartment, twenty-seven-acre development featuring two pools, a clubhouse, a gym, and three tennis courts. His family later moved to a modest home in Beechhurst, Queens. He attended a series of local public schools, where he entered a program for gifted students. Although his father was not ethnically Jewish and an atheist, he attended synagogue with his family at the Whitestone Hebrew Centre in Whitestone, New York. Paulson did not find out that his father was not Jewish until he was twelve. Despite his upbringing, Paulson listed in his yearbook at Bayside High the "Jesus club" and the "divine light club" among his interests during his senior year.[3]

In 1973, Paulson entered New York University (NYU). As a freshman, he studied creative writing, worked in film production, and took philosophy courses. He soon lost his interest in his studies and his grades suffered. His father, sensing that he needed a change, proposed that his son take a summer trip. He bought him an airplane ticket to South America and that summer John traveled throughout Panama and Colombia before finally making his way to Ecuador where he stayed with a wealthy uncle.[8] In Ecuador, Paulson states the experience living with his uncle: “brought me back to liking money again”. Tiring of his privileged but uneventful life in Guayaquil, he traveled to Quito where he soon ran out of money. It was there he started his first business venture after meeting a man who manufactured cheap children’s clothing. Paulson commissioned some samples which he sent to his father back in New York. His father successfully marketed the clothing to several department stores and the venture became quite successful. Later, Paulson and his father, using the same arrangement, branched into wood parquet flooring selling $250,000 in flooring. His father gave him the entire $25,000 commission.[3]

In 1976, Paulson returned to NYU after realizing that sales did not provide the steady and secure cash flows he desired.[3] At NYU, he developed a reputation among his classmates for having a unique ability to boil down complex ideas into simple terms.[9] In 1978, he received his bachelor's degree in finance summa cum laude from New York University's College of Business and Public Administration (now the New York University Stern School of Business), where he was valedictorian of his class.[8] Paulson subsequently attended Harvard Business School, where he received the Sidney J. Weinberg/Goldman Sachs scholarship. In 1980, Paulson graduated from HBS as a George F. Baker Scholar (top 5 percent of his class) earning an MBA.[8]

Career[edit]

Paulson began his career at Boston Consulting Group in 1980. The work Paulson did at Boston Consulting Group was research intensive, and he excelled at it. But Paulson was not investing, just giving advice to companies, and he wanted to move to Wall Street without starting all over again from the bottom of the ladder. He then left to join Odyssey Partners where he worked with Leon Levy. Later he took a position in the mergers and acquisitions department at Bear Stearns followed by partner status at the mergers arbitrage firm Gruss Partners LP. In 1994, he founded his own hedge fund, Paulson & Co. with $2 million and one employee.[citation needed]

From at least 1997 until June 2001 Paulson & Co. rented office space from Bear Stearns at 277 Park Avenue, on the 26th Floor, set up for their prime brokerage clients. His modest office along the windows was on the west end of the 48th-Street side, but not on the corner, and he had an area for one or two trade execution people, sometimes an analyst, and eventually a secretary. Also on this floor were other event-driven managers Dan Loeb (of Third Point Advisors), Nancy Havens, Barry Neuberger, Scott Keller,and Seth Washburne, and John was well-respected. In June 2001 Bear Stearns lost their lease, and everyone moved out, Paulson to 57th and Madison, and this is where most of his asset growth began.

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.[10] Later that year he began a new fund that lent money to investment banks and hedge funds during the mortgage crisis.[citation needed] Paulson "shot to fame and fortune" when his investment strategies paid off during the subprime housing market crash.[11] His bet against the subprime mortgage bubble has been called the greatest trade ever by Gregory Zuckerman and others.[12][13]

Philanthropy and political contributions[edit]

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, $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.[14][15][16] In October 2012, Paulson donated $100 million to the Central Park Conservancy, the nonprofit organization that maintains New York City's Central Park.[17]

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.[18] In 2008 while testifying before US 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.”[19] In 2011, Paulson donated $1 million to Mitt Romney's Super PAC Restore Our Future.[20] His name and picture were featured in an episode of the Colbert Report, in a segment mock-honoring the 22 largest Super PAC donors.[21] In a 2012 interview with Bloomberg Businessweek magazine he expressed displeasure over the Occupy Wall Street movement and protestors who had picketed his townhouse in 2011.[19]

Personal life[edit]

In 2000, he married Jenny Zaharia, in an Episcopalian Church in Southampton, New York.[3] 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.[3] They have two daughters, Giselle and Danielle,[22] and live on the Upper East Side of New York City. He owns several homes, including one in Aspen purchased for $24.5 million in 2010, an estate in Southampton he bought for $41 million in 2008, and a 28,500-square-foot Upper East Side townhouse on East 86th Street, obtained for $14.7 million in 2004.[19][2][23] Paulson has an older sister named Theodora Bar-El née Paulson; PhD, a prominent Israeli biologist. Template:Http://www.bio.huji.ac.il/eng/staff.asp?cat=0&in=0&letter=B

See also[edit]

References[edit]

  1. ^ a b c d e f g h Forbes: "The World's Billionaires - John Paulson" March 2013
  2. ^ a b McShane, Larry. "John Paulson, hedge fund heavyweight, raked in $5 billion last year, roughly $13.7 million a day". New York Daily News. January 29, 2011. Retrieved February 24, 2011.
  3. ^ a b c d e f g h The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Changed Financial History p.16-25
  4. ^ El Universo: "Familia de migrantes con raíces europeas" December 12, 2010 (in Spanish)
  5. ^ Goldiner, Dave. "Queens-born John Paulson makes fortune on home foreclosures". New York Daily News. January 16, 2008.
  6. ^ Dion, Don. "Fund Lessons From John Paulson". The STREET. October 10, 2009.
  7. ^ New York Times: "Paid Notice: Deaths PAULSON, ALFRED G." July 25, 2002
  8. ^ a b c Ahuja, Maneet. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds. John Wiley & Sons, 2012.
  9. ^ http://books.google.com/books?id=pJO1LdAZ0KEC&pg=PA21&lpg=PA21&dq=john+paulson+ability+to+boil+down+complex+ideas&source=bl&ots=ySOiKMJGbl&sig=Nb4zSrvsSePH3uYCSMAcFCNWBB8&hl=en&sa=X&ei=RWF6UsXtEuu_sQTd1IEY&ved=0CDEQ6AEwAQ#v=onepage&q=john%20paulson%20ability%20to%20boil%20down%20complex%20ideas&f=false
  10. ^ Paulson, John. "The Public Deserves a Better Deal". Wall Street Journal. September 26, 2008.
  11. ^ Yahoo news Paulson Loses More Sept Fund Now Off 47%, Svea Herbst-Bayliss, Oct 8 2011, Retrieved Oct 2011
  12. ^ "Top 10 greatest trades of all time". International Business Times. 6 January 2011. Retrieved 26 March 2012. "Paulson does indeed deserve the title of having made the greatest trade ever." 
  13. ^ 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. ISBN 978-0-385-52994-5. Retrieved 26 March 2012. 
  14. ^ Kerpen, Phil. "SEC Probe Shouldn't Stop With Goldman Sachs". Fox News. April 20, 2010.
  15. ^ "Hedge Fund Founder John A. Paulson Gives $20 Million to NYU Stern". New York University Leonard N. Stern School of Business. November 12, 2009.
  16. ^ Kroll, Luisa."John Paulson Pledges $15 Million In Ecuador". Forbes. November 23, 2010.
  17. ^ http://www.nytimes.com/2012/10/24/nyregion/billionaire-donates-100-million-to-central-park.html
  18. ^ Campaign Contribution Search: John Paulson. Federal Election Commission data via NEWSMEAT. February 7, 2011.
  19. ^ a b c John Paulson's Very Bad Year By Sheelah Kolhatkar| businessweek.com| 28 June 2012
  20. ^ "Who’s Financing the ‘Super PACs’". New York Times. February 1, 2012.
  21. ^ "America's Biggest Super PAC Donors" The Colbert Report February 2, 2012.
  22. ^ New York Times: "EVENING HOURS; Family Fetes" By Bill Cunningham December 14, 2008
  23. ^ The Bucharest herald: "Jenny Paulson, wealthiest Romanian woman in the world. Her wealth stands at 7 billion dollars" November 22, 2011

External links[edit]