John Pauson is one of the most famous hedge fund managers today. The largest deal of Pauson far is his bet against the housing market in the United States shortly before the global financial crisis to occur. As a result of his successful transaction Pauson & Co hedge fund some time is the third largest in the world in mid-2012 managed an impressive $ 24 billion.
What Pauson done is truly remarkable. There are many analysts who were able to provide this bubble, but people who have made a fortune as a result, may be counted on the fingers. Yet to bet against the largest economy in the world in a time when everyone else buy, want not a little courage.
The moral of his story is that big money do those who bravely stand against the opinion of the crowd.
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 Sterns 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.
In 2006 Paulson organized a new fund (Paulson Credit Opportunity Fund) betting against bonds backed by subprime mortgages using credit default swaps. Paulson “shot to fame and fortune” when his investment strategies paid off during the subprime housing market crash. His bet against the subprime mortgage bubble has been called “the greatest trade ever” by Gregory Zuckerman who wrote a book by that.
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