|| 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 possible way."
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 press.
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
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
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.