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John Paulson
United States
Net Worth
$4.3B
Source of Wealth
Hedge Funds
Global Rank
#102 of 157
About John Paulson
John Alfred Paulson is the founder and president of Paulson & Co., a New York-based hedge fund. Born in Queens, New York in 1955, Paulson grew up in a middle-class family, attended New York University's Stern School of Business, and earned his MBA from Harvard Business School.
Paulson made history with what is widely considered the greatest trade ever executed on Wall Street. In 2007, he bet against the subprime mortgage market through credit default swaps, generating approximately $15 billion for his fund and $4 billion personally — more than George Soros made breaking the Bank of England.
Before the Big Short, Paulson was a relatively unknown merger-arbitrage specialist. After the trade, he became one of the most famous hedge fund managers in history. His subsequent career included large bets on gold and — notably — a significant position in Fannie Mae preferred shares. Paulson & Co. built a major stake in GSE (Government-Sponsored Enterprise) preferred stock, betting that Fannie Mae and Freddie Mac shareholders would eventually see value restored following the 2008 conservatorship and the Third Amendment Net Worth Sweep. This GSE preferred bet represents one of the longest-running activist-style investment theses on Wall Street, with Paulson among the most prominent institutional holders.
In 2024, Paulson converted Paulson & Co. from a hedge fund to a family office, managing his personal wealth. He has been a major philanthropist, particularly in education and conservation.
Key Achievements
The Greatest Trade Ever
Bet against the subprime mortgage market in 2007, generating approximately $15 billion for his fund and $4 billion personally — widely considered the single most profitable trade in Wall Street history.
Built Paulson & Co. from Scratch
Founded Paulson & Co. in 1994 as a small merger-arbitrage fund with $2 million in capital. Grew it into one of the largest hedge funds in the world with over $36 billion in assets at its peak.
Transformative Philanthropy
Donated $400 million to Harvard — the largest gift in the university's history. Also made major contributions to NYU Stern, Central Park Conservancy, and conservation efforts.
Gold Investment Thesis
In 2009-2010, made a massive bet on gold as an inflation hedge against government money-printing, generating billions when gold prices surged to record highs.
GSE Preferred Share Bet
Built a significant position in Fannie Mae preferred shares, betting that GSE preferred shareholders would see value restored after the 2008 conservatorship and the government's Third Amendment Net Worth Sweep. One of the most prominent institutional holders of GSE preferred stock.
Notable Quotes
“The most important thing in investing is to understand the downside. If you can protect the downside, the upside takes care of itself.”
— John Paulson
“I've always believed that you should invest based on deep fundamental research, not on what the crowd is doing.”
— John Paulson
“In the housing market, the risk was enormous and nobody was paying attention. That's when the greatest opportunities arise.”
— John Paulson
“Merger arbitrage taught me patience, discipline, and how to analyze risk. Those skills transferred to everything else.”
— John Paulson
“Philanthropy is the best investment you can make. The returns are infinite.”
— John Paulson
Key Decisions
Graduated from NYU Stern School of Business, then went on to Harvard Business School.
Graduated from Harvard Business School. Worked at Bear Stearns in the mergers and acquisitions group.
Founded Paulson & Co. with $2 million in capital, focusing on merger arbitrage.
Began researching the subprime mortgage market after noticing deteriorating lending standards.
Launched the Paulson Credit Opportunities Fund specifically to bet against subprime mortgages.
The Big Short: Generated ~$15 billion as the housing market collapsed, making $4 billion personally.
Pivoted to gold, making a massive long bet as governments printed money in response to the financial crisis.
Gold thesis played out as gold hit $1,900/oz. Fund peaked at $36 billion in AUM.
Donated $400 million to Harvard, the largest gift in the university's history.
Built a major position in Fannie Mae preferred shares (including FNMAT), betting on GSE recapitalization and reversal of the Third Amendment Net Worth Sweep.
Converted Paulson & Co. from a hedge fund to a family office, returning outside capital.
Early Life
Born in Queens, New York in 1955 to a middle-class family. His father was the CFO of a small advertising company. Paulson attended NYU Stern School of Business, worked briefly in consulting, then attended Harvard Business School. After graduating, he worked at Bear Stearns and Odyssey Partners before founding his own fund.
Companies & Ventures
Paulson & Co.
Family OfficeFounder & President · Est. 1994
Founded in 1994 as a merger-arbitrage fund with $2 million in capital. Grew to over $36 billion at peak. Converted to family office in 2024.
Portfolio & Holdings
Notable public equity positions associated with John Paulson.
FNMAT
Fannie Mae Preferred Series T
GLD
SPDR Gold Trust
BHC
Bausch Health
OTIS
Otis Worldwide
GTX
Garrett Motion
Investment Principles
Understand the Downside First
Before analyzing upside potential, thoroughly understand and quantify the maximum possible loss. Protecting capital is the foundation of great returns.
Go Against the Crowd When the Data Supports It
The greatest opportunities emerge when consensus is wrong. The subprime trade worked because virtually no one was looking at the data honestly.
Deep Fundamental Research
Don't rely on models or assumptions — go to the source. Paulson's team analyzed individual mortgage pools, loan-by-loan, to build their subprime thesis.
Asymmetric Bets
Structure trades where the downside is limited but the upside is enormous. Credit default swaps on subprime offered exactly this: small premiums for potentially massive payoffs. His GSE preferred position reflects the same logic — buying preferred shares at deep discounts to par value, betting on eventual recapitalization.
Patience and Timing
Being right too early is the same as being wrong. Merger arbitrage instilled the discipline to wait for the right moment to deploy capital.
Life Lessons & Insights
Humble Beginnings Create Hunger
Growing up in a middle-class Queens family and starting his fund with just $2 million gave Paulson the drive and scrappiness that Wall Street blue bloods often lack.
One Defining Moment Can Create a Legacy
Twenty years of competent but unremarkable merger arbitrage preceded the greatest trade in history. Preparation meets opportunity.
Success Doesn't Guarantee Future Success
Post-2007 investments in gold and other areas produced mixed results. The subprime trade was not repeatable, and Paulson had to find new approaches.
Give Back at Scale
The $400 million Harvard gift and other philanthropy reflect a belief that extreme wealth carries an obligation to improve institutions that create opportunity.
Philanthropy
Paulson has given away hundreds of millions, including a $400 million gift to Harvard (the largest in its history, funding the Harvard John A. Paulson School of Engineering and Applied Sciences), $100 million to the Central Park Conservancy, and major gifts to NYU Stern and conservation organizations. He signed the Giving Pledge in 2012.
Deep Dives
Go deeper into what makes John Paulson exceptional.
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