John Paulson eyes exit from the hedge fund industry.
John Paulson’s call to fortune and fame came from shorting the US housing market in 2007. He foresaw the subprime mortgage crisis and bet against mortgage-backed securities by investing in credit default swaps. It was the greatest trade in history which inspired the Hollywood Oscar-nominated film The Big Short (2015).
John Paulson personally earned $4 billion on this trade alone in 2007 which transformed him from an anonymous money manager to financial legend.
“Years of disappointing returns have driven outside investors away so John Paulson eyes exit and is mulling over closing his fund”
More than a decade on John Paulson eyes exit for his firm Paulson & Co and is converting it into a family office “in the next year or two”
Years of disappointing returns have driven outside investors away so John Paulson eyes exit and is mulling over closing his fund.
John Paulson’s fund now manages around $8.7bn, according to a regulatory filing.
John Paulson fund’s assets reached a peak of around $36bn in 2011 but declined rapidly since then. John Paulson was managing around $16bn in late 2016 but that figure has now halved.
John Paulson eyes exit from the hedge fund industry is not unusual
George Soros and Stanley Druckenmiller are as examples of hedge fund managers who had converted their fund management operations into family offices.
“John Paulson fund’s assets reached a peak of around $36bn in 2011 but declined rapidly since then”
More recently, Leon Cooperman of Omega Advisors also took the same step.
So turning hedge funds which once managed outside money into a family office is now becoming a usual path for retiring hedge fund managers. A family office means return outside investors’ capital and focuses on solely managing their own fortunes. The main advantage of a family office is that there is less red tape, regarding regulatory requirements which frees up investor’s time to focus on their main activity, investing.
“Most people eventually, when they get to this level, they do make a decision, do they want to get bigger and you know, create a bigger business of managing money or opt to make their life easier and morph into a family office”
– John Paulson
To make life less complicated John Paulson eyes exit
“Most people eventually, when they get to this level, they do make a decision, do they want to get bigger and you know, create a bigger business of managing money” or opt to “make their life easier and morph into a family office”, said John Paulson on a podcast hosted by Broome Street Capital founder Michael Samuels.
A string of recent losing bets could also weigh heavy on why John Paulson eyes exit
John Paulson has made a string of loss-making bets in recent years, they include betting against German bonds, banks, pharmaceutical companies, and gold.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.