Sunday, May 17, 2009

His Name is John Paulson

John Paulson received his M.B.A. from Harvard business school, finishing in the top 5% of his class. He worked for a few financial firms in the early 1990's before starting his own hedge fund in 1994 with two employees and $2 million in capital.

Since those early days his growth in the industry has been nothing short of breathtaking. In November of 2008 his hedge fund had grown to over $36 BILLION in size.

His credibility was under serious question back in 2006 when he decided to take an enormous bet AGAINST something called subprime debt. You have to remember that back in 2006 subprime was not a bad word, it was thought of as an opportunity for greater returns with little risk.

Anyone who was "short" this debt back in 2006 was laughed at by other money managers.

You know where the story goes from here........In the summer of 2007, subprime debt began to topple, and in 2008 it disintegrated.

John Paulson now starts this year as one of the richest men in the world and someone considered by his peers as one of the absolute best at what he does.

On Friday, May 15th, the world was able to see where he put his money to work in the first quarter of 2009. Once again, people were very surprised.

At the end of the first quarter.....

-Paulson became the largest hold of Spider Gold Trust, an investment firm that buys gold bullion and stores it. He increased his holding to 8.7% of the entire trust, a massive increase in his position.

-His funds now have a share class that is denominated in gold, not euros or dollars. This is unprecedented in the hedge fund industry.

-He purchased a 15% stake in Market Vectors Gold Miners ETF, a fund that purchases a basket of the top gold mining companies.

-He bought a 2.6% stake in Gold Fields, becoming the fourth largest owner, and he took massive positions in gold miners across the industry.

John Paulson, the man who stood against the world and bet against subprime debt, now sees a new opportunity. The question is, do you want to bet with him or against him?

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