John Paulson currently manages $9 billion, less than $1 billion of which belongs to people who do not work for Paulson & Co. Seven years ago, he was capably (at times) running nearly $40 billion. So there’s probably not a capacity issue here. And yet:
Paulson’s namesake firm, once one of the biggest in the industry, will return money to investors in some funds including the Credit Opportunities, said people familiar with the matter. Investors in that credit fund can transfer their capital to a separate pool or they’ll be forced to redeem.
You remember Credit Opportunities? About yea high, made about 600%—and Paulson’s name—when the mortgage crisis hit? Like his somewhat less-successful all-in-on-gold fund, it’s now a JP-only enterprise.
Is this a dry run for Paulson & Co.’s inevitable future as a family office, which it pretty much is except in name only already? Are the layoffs this week of some more senior people a further exercise in “rightsizing the firm” to one day manage only internal capital, willingly or otherwise? Or is this textbook Eric Cartman “You Can’t Come” technique marketing, pushing people out of a fund that actually made money last year to remind them how much they once loved Paulson, perhaps enough to invest in one of these funds, which have done rather less well?
For now, there are no immediate plans to turn the firm into a family office, people close to Paulson say. Instead it’s re-focusing on distressed debt and merger arbitrage strategies…. The company this week let go of its head of trading, Keith Hannan; head credit trader, Brad Rosenberg; and partners Victor Flores and Allen Puwalski.