|| John Paulson at
the U.S. Open in September 2012 (Photo:
flagship fund down double digits for a second consecutive
year and his
preferred presidential candidate, Mitt Romney, dropping in
the polls, hedge fund manager John Paulson has turned his
attention to a new foe: the U.S. Securities and Exchange
The winner of what some called "
The Greatest Trade Ever" against the subprime mortgage
market let loose last night at a private gathering on exactly
how little he thinks of the information his $19.5 billion firm
is providing to regulators.
"I couldn't even read the whole application," he said to
guffaws from several hundred young Jewish professionals
gathered sipping on spirits and kosher wine at event space
Chelsea Pearl in downtown Manhattan to hear his advice on how
to make it in finance. "I did review part of the application,
about 40 pages [out of 500], and the information we provided
doesn't make any sense to me. How could it possibly make sense
to the SEC?"
"It's a complete waste of time," he added. "They don't know
what they wanted, they just asked for everything in every
As part of the Dodd-Frank Act, signed into law by President
Barack Obama in 2010, more hedge fund firms have been required
register publicly with the SEC. They must also provide more
information, including "
Form PF," a private disclosure on their holdings, which the
government hopes will give regulators more information on how
to prevent systemic risk.
Color Paulson unimpressed.
"I don't believe the Dodd-Frank law is a positive piece of
legislation," he said dryly, understating his distaste. "I
ordered the bill; there are 2,000 pages. I couldn't read the
table of contents. I don't know anyone who has read it."
"I think it has retarded the recovery…it's complete
gobbledygook," Paulson added.
reported this week that Paulson's net worth had dropped $4
billion in the past year (from $15 billion to $11 billion), but
he showed little signs of stress. Easily among the most tanned
people at the event organized by nonprofit Young Jewish
Professionals network, he waltzed in casually five minutes
late-interrupting a berekah prayer from a member of
Chabad, the Orthodox Jewish movement-and later rolled his eyes
when asked if he was tired of reading his name in the
Dressed conservatively in a dark suit and blue tie, at one
point he flatly refused to answer a query about whether hedge
funds had reputational issues to overcome in the public
"I love hedge funds. I have 100% of my money in hedge funds and
I've done great doing that," he said. All of that money is in
his eponymous firm, spokesman Armel Leslie said Friday.
Paulson answered questions alongside Ken Brody, co-founder
of $6.85 billion
Taconic Capital Advisors. Both men said the next big bubble
to burst would be the 30-year U.S. Treasury note,
echoing the advice last week of Jeffrey Gundlach, head of
$30 billion DoubleLine Capital ($1.5 billion of which is in
"If inflation occurs, which is a reasonable bet, you're in
really bad shape," Brody said of people holding 30-year
Treasuries. At Paulson & Co., traders are buying up
seven-year calls on interest rates rather than shorting the
bond directly, which would be too expensive in the short-term,
Paulson said in response to an audience question.
After the panel discussion ended, Paulson stuck around for
about an hour to collect business cards and adulation from
young attendees unconcerned with the performance of his funds
in recent years (see full data
here). He talked easily, smiling throughout. Loud music,
however, began to crowd out his words. "Can you hear anything?"
asked one fresh-faced young man to another as they attempted to
push into the throng of dozens surrounding Paulson.
"No," the other answered with a grin, and pushed a little
harder into the scrum.