||Britney's shaved head and Paulson's shaved
returns: Haven't they suffered enough?
By Rob Copeland
A celebrity cause du jour for the past
year has been to combat bullying, defined as unwanted, aggressive behavior that
involves a real or perceived power imbalance. "The behavior is
repeated, or has the potential to be repeated, over time," the
federal government states.
It's time the hedge fund industry takes a stand for
one of its own who has been persecuted and attacked far beyond
his proportionate importance. He is the scrawniest kid on the
playground, hooked to a tetherball pole, swinging 'round and
'round until his Coke bottle bifocals fall off. We should
probably invoke the mercy rule. Once and for all, altogether
now: Leave John Paulson alone!
Back in the days of The Greatest Trade Ever, Paulson
deserved the attention. Even in 2011 midway through what might
charitably be called The Greatest Fall From Grace Ever, he was
undoubtedly interesting. By now, though, the punch lines have
grown stale, and we are approaching Britney-shaving-her head
territory. To keep staring would be cruel.
We are right about at the point when Joaquin
Phoenix grew a Messianic beard and appeared so
stoned on late night television it pushed some to question
whether he was in on the joke.
Paulson does not appear to be laughing. He's the
Heidi Montag of the hedge fund industry: A man dramatically
disfigured (returns-wise anyway--the year-round tan and
Mediterranean complexion have never looked better) yet
apparently unaware of how different he is from everyone else in
the room. He's still smiling for photo shoots with major magazines and taking shots at regulators. Meanwhile last year
as the median Americas event-driven hedge fund rose 10.38%,
according to the Absolute Return benchmark, Paulson's Advantage
Plus strategy casually dropped 21.41%. And that a huge
improvement from the year before! (See full returns here).
What kind of sick, demented, sadist would keep
paying attention? The least we can do is let the man rest in
peace. Those who have trusted him with their money appear to be
doing just that: the firm is down to roughly $17 billion in
assets, from $36 billion just two years ago.
While those investors are fleeing the scene of the
crimei, the rubber-necking
by the national press has continued unabated. Every month,
otherwise sober-minded reporters at wire services and
newspapers trip over themselves to be the first to describe his
latest loss (and with eight negative months out of the past
twelve for his Advantage funds, there's been plenty of
opportunity to go around). When was the last time you read a
standalone performance story on Baupost Group's returns, or one
of the giant J.P. Morgan Asset Management funds, or Angelo,
Gordon & Co.?
All of those firms manage significantly more money
overall, let alone for external investors (the multi-multi-billionaire Paulson has said the vast
majority of his fortune is invested in his own funds, giving
himself a potential majority of the LP). Yet his competitors
manage to slip by with relatively scant notice.
Like most dying stars, John Paulson was barely a
factor in the galaxy before falling his way into a black hole.
Unfortunately, black holes are said to be able to theoretically
survive longer than the age of the universe. If he's going to
bleed out for that long, the least we can do is be decent and
avert our eyes.
Rob Copeland is an Absolute Return staff
writer. He can reached at firstname.lastname@example.org
not been accused of any crimes. That a $10 million investment
in his Advantage Plus fund at the start of 2011 would be worth
$3.73 million today is absolutely, by all indications, wholly
legal, and not a violation of federal statute 18 U.S.C. 333.