The LSE Directory / Hedge fund managers
John Alfred Paulson (born 1955) is the founder of Paulson & Co. and the architect of what Gregory Zuckerman called 'the greatest trade ever' in his eponymous 2009 book. Paulson had built a successful event-driven and merger arbitrage hedge fund in the late 1990s and 2000s, but the trade that defined his career began in 2006-2007 when he worked with analyst Paolo Pellegrini to identify that the US subprime mortgage market was catastrophically mispriced. Paulson's funds purchased credit default swaps on collateralised debt obligations (CDOs) backed by subprime mortgages, making several billion dollars of premium payments before the housing market collapsed. When it did in 2007, Paulson & Co. generated approximately $15 billion in profit for the funds, with Paulson personally earning approximately $3-4 billion, making it one of the single largest annual profits by any individual investor in history. Assets under management subsequently grew to approximately $38 billion by 2011 before a series of poor calls (particularly a large long gold position) led to significant investor withdrawals. By 2024 AUM had shrunk to approximately $3 billion.
