Hedge Funds

Former Paulson Protégé In A Charitable Places About Losses

Remember Paolo Pellegrini? For those who need a refresher, the Italian Stallion is the former Paulson and Co. employee who helped John come up with a highly lucrative subprime trade, later leaving the firm to set up his own shop (the delightfully named PSQR AKA Pellegrini Squared) after some reported friction re: whether or not he was getting enough credit for netting the hedge fund billions via ‘the greatest trade ever.’ PSQR returned 40% in 2008 and 61.6% in 2009 and then in August 2010, Pellegrini gave back all outside investor capital, stating that he would be focusing on managing his own money. And speaking of Paolo’s pennies, the ones he had invested with Paulson have taken a li’l bit of a hit lately. But according to Big P, who previously dabbled in DJ’ing and efforts to get pot legalized, it’s all good.

At the beginning of last year, Mr. Pellegrini invested in Paulson Advantage Plus, the fund that has stumbled badly. The sum invested was “a significant portion of my personal money,” Mr. Pellegrini says. Two other people familiar with the investment say it was between $10 million and $20 million. Mr. Pellegrini says he withdrew half of his remaining money at the beginning of this year after the previous year’s losses. But Mr. Paulson’s cold streak has continued, with the Advantage Plus fund down more than 16% this year through June, according to an investor…Despite the setback, Mr. Pellegrini, a 55-year-old native of Italy who now lives in Manhattan, says he isn’t bitter. “I’m disappointed but I don’t fault them for not doing their work,” Mr. Pellegrini in an interview. “This is a very difficult market to predict…as an investor, it’s like a game of Russian roulette.” Referring to Mr. Paulson, Mr. Pellegrini says: “Among global fund managers, John’s one of the most talented.”

Considering the fact that that’s one of the nicest things anyone who’s lost money with Paulson has had to say in recent memory, it sounds like all that stuff about JP ‘humiliating‘ and under-appreciating Pellegrini is water under the bridge. And not to get too far ahead of ourselves but perhaps it’s time to get the old gang back to together again? Think about it: Pellegs is unemployed, Paulson needs to pull himself of the mire (and muck) he’s wallowing in and Paolo may or may not be his lucky rabbit’s foot. Just something to consider.

Paulson Ex-Lieutenant Caught in Fund’s Slide [WSJ]

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78 Responses to “Former Paulson Protégé In A Charitable Places About Losses”

  1. Texashedge says:

    It looks so legal in that pic

  2. Brian Hunter says:

    Getting the band back together? Always a good idea in my opinion.

    -The Big Mouth Bass Killer

  3. J. Cayne says:

    I'm ready and I know we agree politically on the…important [inhales] issues of the day.
    Do they play bridge in Italy?

  4. investorcluzo says:

    "I’m disappointed but I don’t fault them for not doing their work"
    -nothing backhanded about that comment. perhaps it's time for someone to examine his motives…

  5. Guest says:

    "As an investor, it’s like a game of Russian roulette." Completely stunned that he had to shut his fund down.

  6. ILoveLamp says:

    That last quote must have been edited. What PP actually said was, "Among global fund managers whose performance sucks ass, and who haven't had a good original idea in 5 years, John’s one of the most talented.”

  7. Master P says:

    Paulo Pellegrini, Paulson's previously-patient protege, pulled a portion of his placement pursuant to the portfolio's persistent poor performance.

  8. Seabass says:

    Pellegrini, what is that, Canadian?

  9. Anonymous says:

    My research indicates that success in Russian roulette increases linearly with the number of bullets used.

    — UBS .38 quant

  10. pazzo83 says:

    Hey-a Signore Paulson, come-a take a walk with me…

    – P Pellegrini

  11. leeminbrahs says:

    Paulson says: Hey Pellegrini, you ever coming back?

    Pellgrini responds: You kidding? I am Queen's Boulevard.

    -Epic Entourage Moment

  12. guest says:

    Pellegrini says one thing, then does the complete opposite with his money. Good spin, old chap.

    Also, didn't Paulson give Pellegrini his first big shot? I think I remember reading that Pellegrini was a career changer and came into Paulson's fund as a late 30's ANALYST. Fuckin' hell.

    • Guest says:

      Rough life being a late 30's analyst getting a $175MM bonus. Maybe we should throw food at him, no?

    • guest says:

      this is not some stupid investment bank he was working at. the "analyst" title does not describe people one to two years out of college. there are analysts at hedge funds in their 40s, making 8 figures. would you rather be an Associate, making 6?

  13. Guestard says:

    Listen Paulo, at some point you need to stop worrying about performance and returns… what really matters in this business is the ability to raise money.

    – J. Meriwether

    • guest says:

      also, KKR, blackstone, tpg, GS PIA, most VC funds, most mutual funds, most hedge funds…i'm probably forgetting someone.

  14. Guest says:

    Bad month for Paulson Advantage Plus = PAP Smear?

  15. canadur! says:

    iirc from that book about him, Pelegrini was a failed investment banker in his 40s, forced out of Lazard because his tieriness wasnt quite top and Paulson basically hired him as a favor. Of course Paolo returned it by turning Paulson from some piddling, couple hundred million AUM merger arb into a billionaire genius into a billionaire sucker.

  16. Yanni says:

    Jerry Seinfeld's protege wants in.

  17. Repo says:

    To be fair, PSQR was probably a play on SPQR, what with the Italian connection and all. I'll give him a little credit (call it strong Caa / weak B3 level) for that one.

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