Paulson & Co.

John Paulson Had A Pretty Good May

Mostly due to a killer Memorial Day weekend BBQ out east, but he’ll take what he can get. Read more »

Lovestruck George Soros Is Back On Top

Just in time for Valentine’s Day comes the romantic story that the the 83 year-old hedge fund manager made a ton of money in 2013, and about 80%* it before his September 21st nuptials and can therefore keep to himself,** should this marriage should end in a similar manner to his first two. Read more »

John Paulson Breaks Baklava With The Men Selling Greece

Greece has heard through the deeply indebted grapevine that Mr. John Paulson is interested in tropical islands. Read more »

John Paulson Bought A Beach

He’s still not moving to Puerto Rico to save a few hundred million on taxes. But if he did, we’re pretty sure a certain luxury seaside compound has a good chance of landing Casa Paulson. Read more »

‘Cause somebody’s recouped record losses in his Recovery fund, meaning somebody can start charging performance fees again! Read more »

  • 29 Jul 2013 at 10:26 AM

Fabulous Fab Really Wanted To Get Abacus Done

Fabrice Tourre testified in his SEC trial late last week and many perplexing things came out, with the most perplexing being a tie between:

Perhaps less perplexing is that Fab’s feelings about Abacus seem to have been less about bamboozling one client on behalf of another and more about just printing a trade, whichever direction it went in. John Carney reports that Goldman was taking too long getting ABN Amro to intermediate ACA’s guarantee of the super senior tranche of the deal, Paulson was getting antsy, and Fab, ever servicey, was trying to assuage their antsiness by just getting Goldman to do the deal naked: Read more »

  • 24 Jul 2013 at 10:53 AM

Fab Tourre’s CDO Deal Wasn’t Complicated Enough

If you wanted to short the housing market in 2007 you could just buy protection on mortgage-backed securities via a synthetic CDO, and that’s what John Paulson did in the Abacus deal, for which Goldman Sachs and Fab Tourre got in trouble. But the problem with that is that buying protection costs money; just for instance the super-senior protection in Abacus would run you about 50bps, or around $4.5 million a year on the $909mm notional that ACA Capital wrapped.1 And who wants to throw away millions of dollars a year waiting for the housing market to crash?

So another way to short the market is to buy a lot of protection on senior tranches of CDOs (cheap because: what are the odds that the housing market will crash?) while also selling a little protection on junior tranches (expensive because the odds that there’ll be some defaults are higher). If you do this, you can have a positive carry (you get paid as more each year on the protection you sold than you pay on the protection you bought), but you can make just about as much money if the housing market craters and there are massive defaults. (The tradeoff is that if performance is mediocre, with some defaults, then you lose money on the junior protection you sold and don’t make it back on the senior protection you bought.)

This second trade is a very stylized description of what Magnetar did,2 in another CDO deal for which JPMorgan got in a bit of trouble. Less than Goldman, though! Read more »