Some of the questions focused on Mr. Paulson's flagship fund's performance, which he admitted was disappointing, though the tone of the call wasn't "agitated or aggressive, even though some people were frustrated," said a person familiar with the discussion. One person asked Mr. Paulson for a timeline of how long it would take to turn things around. He declined to specify a timeline, but said his objective was to win back the losses the fund had suffered. Mr. Paulson said the fund didn't need a broad market rally. Instead, he noted, some specific investments would need to perform better. [WSJ, related]
Paulson and Co Investor Finds New And Interesting Way To Kick John Paulson When He's Down
As Paulson and Co employees, clients, and people named John Paulson do not need to be told, the past year and half has not been the most joyous of times for the hedge fund giant. After making billions shorting subprime mortgages, the firm ended 2011 down 55 percent, was down 16 percent through the first half of 2012, and as of July, saw assets under management decline 44.9 percent to $21 billion from $38.1 billion, due to a combination of unfortunate performance and redemptions by investors so angry at the fund that they've felt the need to repeatedly tell anyone who will listen that parting ways with P&C was among the best if not the best decision they've ever made. One investor that hasn't had to consider voicing its unhappiness to the press or even worry about losing money at all? The 92nd Street Y. Last November Paulson guaranteed that he would personally cover their losses, whatever they turned out to be, come year-end. And the generosity did not stop there: for this one investor only, Paulson offered his services pro-bono, waiving all fees. So while he probably didn't expect representatives of the Y to rent a skywriting plane to proclaim their love and appreciation for him over midtown, lobby the city of New York to get 92nd renamed Paulson Street, or have his face tattooed to their chests, he probably also figured they wouldn't turn around and hit him the mother of all slaps in the face. In this case the declaration that despite the highly favorable terms of their arrangement, any involvement with P&C still felt a tad too risky for everyone's comfort level. In the midst of the financial crisis, the 92nd Street Y came up with a sweetheart deal for its endowment: investments in funds run by the likes of John Paulson, Marc Lasry, and other hedge-fund luminaries that were fee-free and guaranteed against losses. The strategy performed well for several years, said people familiar with how it worked, as the Y benefited from risk-free investing in some of the fund industry’s most successful strategies. But, concerned about the impact of a catastrophe in which a money manager couldn’t repay losses and eager to construct a more diversified portfolio, the Y recently opted to redeem its hedge-fund investments, these people said, and rebuild its financial strategy from scratch. Paulson himself is worth $15 billion, so a catastrophe in which he couldn't repay the Y's losses would have to be a big one. And don't give him some line about how you're pulling out of all hedge fund investments and it's not personal. You could have let him have this. Despite Sweet Deal, 92nd Street Y Redeems Paulson Money [CNBC] Earlier: John Paulson: I’ll Get The Losses This Year, Next Year We Go Dutch?
All John Paulson Does Is Win
Starting today! Every day before it (not including 2007-2009) shall never be spoken of again! Don't even entertain the thought of uttering '2010-2012,' in his presence or otherwise! Don't say it, don't even think it! Someone run out and get some holy water because this is nothing short of a rebirth! Today is the first day of the rest of his life!
Bonus Watch '13: Paulson And Co.
The bad news: even if Paulson and Co. turns things around in 2012, they might not get to collect performance fees, on account of being under water due to last year's annus fucking horribilis. The good news: John Paulson's employee will still get paid, because that's just the kind of guy he is. Paulson’s flagship fund, Advantage Plus, fell a whopping 53 percent last year – prompting an apology to investors and a media drubbing. The decline also meant that it could be years before Advantage Plus and other fallen Paulson funds are able to return to their high-water mark, or the returns level at which John Paulson and his colleagues can begin to collect a significant percentage of their annual gains as performance fees. In an acknowledgement of that problem, Paulson recently told some employees he would reset the firm’s internal high-water mark to zero as of Jan. 1, said the person familiar with the matter, effectively meaning that if the company’s funds are in the black for 2012, those employees can collect bonuses pegged to this year’s returns and not be dragged down by last year’s losses. Paulson will pay for those bonuses himself, this person added. John Paulson Lowers the Bar to Pay Employees [CNBC] Related: John Paulson: I’ll Get The Losses This Year, Next Year We Go Dutch?