Paulson Hedge Fund Circling the Wagons

March 18, 2018 James Heinsman Hedge Fund News

The vast empire of funds under management by John Paulson’s management firm is continuing to dwindle in size with layoffs and redemptions.

Paulson’s company, once one of the largest in the sector, announced it will be returning money to investors in some of the firm’s funds including the Credit Opportunities fund. People with money in that particular fund will be able to transfer their capital to a separate holding area, or else they will have to redeem their funds. Several employees were let go as the firm cuts expenses.

About ten years ago Paulson leaped into financial stardom with a successful bet against the US housing market. That was ten years ago, today Paulson is going through a crisis which has cut his firm’s aum from a top $38 billion in 2011 to just about $9 billion today. And most of that money is Paulson’s own.

With about 90% of the money in the firm Paulson’s the question is whether he will close his firm to outside investors entirely. There are no plans underway at the moment to turn the firm into a family office, but the firm is switching its focus on to distressed debt and merger arbitrage strategies.

The loss of capital means there is less money to pay employees, and thus the flurry of lay-offs. In 2016 there were 128 employees, but today there are only 95.

“We are rightsizing the firm to focus on our core expertise in areas that are growing,” said a statement from Paulson’s office about the layoffs.

The headquarters is also being moved to the offices of Steinway Musical Instruments. Paulson bought the piano manufacturer in 2013.

John Paulson, layoffs, Steinway,

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