Established by John Paulson in 1994, Paulson & Co. is a hedge
fund that manages money for corporations, banks and pension
plans. Based in New York City, Paulson & Co. has quickly
become known for the prescience of its founder. In the
early-to-mid 2000s, when consumers were buying houses thanks to low
interest rates and the availability of subprime mortgages, John
Paulson foresaw a shaky path in store for housing prices. As
a result of betting on the subprime mortgage market to crash, his
Credit Opportunities Fund flourished in 2007, increasing 589.9
percent in value. Another Paulson fund reportedly rose 353
percent during the year, and Alpha magazine estimated that Paulson
made $3.7 billion in 2007.
Since then, Paulson has been following his
instinct, and the tactic seems to be working. In 2010, John
Paulson earned $4.9 billion, more than any other hedge funds
manager in the U.S. As of the first quarter 2011, Paulson's
net worth was estimated to be $16 billion.
The hedge fund king from Queens
Born in 1955 in Queens, N.Y., John Paulson has been interested in
the business of turning a profit since he was a kid.
According to a 2009 Portfolio profile of Paulson, as a child, the
budding entrepreneur bought candy in bulk and sold it to classmates
at a markup. After his sugar-selling days, Paulson graduated
from New York University and received an MBA from Harvard Business
School. At Harvard, Paulson attended a speech given Jerry
Kohlberg (of private equity firm Kohlberg, Kravis, Roberts) and was
stirred to implement his own ideas.
After stints at Boston Consulting Group and Bear Stearns, Paulson
created his own hedge fund with $2 million of his own
money. He bet on corporate mergers and
bankruptcy-related corporate cases before betting against subprime
mortgages-which came with consequences. Paulon's winning
housing bets were so impressive that he was forced to appear in
front of a U.S. House committee in November 2008 to account for how
he turned a profit while others were enduring financial ruin.