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John Paulson Could Use A Hug Right Now, But Also Like A Billion Dollars

They say it's not the assets under management that counts!
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One nice thing you can say about John Paulson is that he knows how to take a hit. After he rode Allergan and Valeant all the way to the b he gritted his teeth and stuck with the stocks. When he learned, as company board member, that AIG apparently tried to rebrand itself as a cash disposal business sometime in late 2016, Paulson held onto enough of the investment to (likely) make it a losing proposition. When Donald Trump posted a financial disclosure form in 2015, Paulson's was the only hedge fund to show a loss.

But now Paulson’s mettle will be tested by the greatest indignity of all: His assets under management have fallen to a mere ten digits. That is, one digit shy of the $10-plus billion Paulson & Co. had in its coffers at the beginning of the year, according to a New York Times report:

Paulson & Company manages just under $10 billion today, down from $36 billion in 2011. Nearly two years ago, some Wall Street banks began to recommend that investors redeem some of their money from the firm.

That dip is probably related to the fact that Paulson posted a first quarter that – to say another nice thing about him – remains remarkably consistent with 2016 (and 2015 and 2014):

And Mr. Paulson and other hedge fund managers stand to be big beneficiaries of Mr. Trump’s plans to slash taxes.

Yet 2017 is shaping up as another rough one for Mr. Paulson. The Advantage fund was down 9.7 percent as of the end of March and the Partners Enhanced fund continues to sink — falling just over 8 percent after last year’s 49 percent plunge.

So maybe that whole merger-arb thing is played out (about which Paulson kind of agrees). In that case it's time to find a new schtick, and fast. Maybe Paulson can ask his friend the president for some ideas, given their shared talent for relieving investors of their investments. Though apparently he has some ideas of his own:

Mr. Paulson has remained upbeat with investors, according to two people who have seen recent investor letters but spoke on the condition of anonymity.

“While we are disappointed in performance in 2016, we believe we have a path to a recovery,” Mr. Paulson told investors in one letter.

John Paulson’s Fall From Hedge Fund Stardom [New York Times]


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