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Presenting John Paulson's Mea Culpa For Worst Year Ever

Tyler Durden's picture


It is a bad day for people named Paulson. We are not sure if John Paulson, who has not updated the HSBC hedge fund performance tracker through November although was quite happy to do so in October when the market could only rip higher, is more apologetic in his latest letter for the fact that his sold gold holdings to buy even more Bank of America stock, which as everyone knows is about to have a 4 handle, or because somehow his gold fund has managed to return just 1%, even as the shiny object itself has a solid 20% YTD return. Frankly we don't care; LPs in the fund, however, should... although as Paulson has repeatedly stated he has barely seen any redemption requests despite his abysmal performance, so at the end of the day it appears that everyone has gotten what they want. The bulk of the attached Paulson Q3 letter, procured courtesy of ValueWalk, says nothing of note, except to regurgitate some repeatedly stated facts about gold stocks being cheap, and to note that Martin Feldstein has joined the fund as an advisor side by side such "luminaries" as Alan Greenspan, Ed Altman and Chris Thornberg. What is notable, is that Paulson has presented investors with a company matrix of five large banks (their identities are quite simply once one looks at the fund's most recent 13F) which he believes will generates ludicrous potential returns. The last time he did this was for Bank of America. Our advice: short these with leverage.

Full letter below:



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Tue, 11/29/2011 - 22:54 | 1928381 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

Martin Feldstein  is "advising" his funds along with Alan Greenspan?  No wonder he's having a shitty year.  Is Greenspan even awake at these "advisory" meetings?

Tue, 11/29/2011 - 22:59 | 1928399 WonderDawg
WonderDawg's picture

Greenspan doesn't have to be awake, he's paid to make sure Paulson gets the inside scoop. So even with the inside scoop, Paulson still sucks.

Tue, 11/29/2011 - 23:00 | 1928405 Savyindallas
Savyindallas's picture

Greenspan is more valuable asleep than awake.He's ignorant , frightening and dangerous when he is awake. Same for bernanke, Obama, and most of the idiotic criminal treasonous morons in D.C. and on Wall Street.

Tue, 11/29/2011 - 22:57 | 1928392 pepperspray
pepperspray's picture

Gold exploration

Tue, 11/29/2011 - 22:58 | 1928396 Temporalist
Temporalist's picture

Just a traditional relic.

Tue, 11/29/2011 - 23:04 | 1928414 pepperspray
pepperspray's picture

Prospecting is all he has left. just diggin that shit right out of the ground

Tue, 11/29/2011 - 22:58 | 1928393 Temporalist
Tue, 11/29/2011 - 22:59 | 1928398 chump666
chump666's picture

He and others are living in the perpetual 2009 mega meltup.  You get one.  They got it.  But you don't get it again. Stocks will trail sideways with nasty volatility till China crashes. 

Tue, 11/29/2011 - 23:19 | 1928453 Alienated Serf
Alienated Serf's picture

I like your thesis.  Looks like China may be hurting soon.


PS- John and Hank Paulson are worthless pissmops.

Wed, 11/30/2011 - 00:06 | 1928592 chump666
chump666's picture

I like the term "pissmop".

Check your charts USD is bid again...Asia = bearish sign.  Markets seem to be topping. 

Tue, 11/29/2011 - 23:00 | 1928402 traderjoe
traderjoe's picture

2012 eps? How does one guess at that sort of crap?

How does a guy go from having a completely contrary idea to becoming the system? Alan Greenspan?

Tue, 11/29/2011 - 23:01 | 1928407 SHEEPFUKKER

Fat finger.  JP meant to go short banks, not long. Selling your gold to cover your bank losses? Two wrongs don't make a right my friend. All the best. 

Tue, 11/29/2011 - 23:15 | 1928439 Jackfish
Jackfish's picture

But three lefts make a right

Tue, 11/29/2011 - 23:06 | 1928419 ucsbcanuck
ucsbcanuck's picture

At least Paolo Pellegrini had the good sense to get out of the game completely. Paulson is demonstrating how we can get fooled by randomness - he got extremely lucky once and we thought he was an unknown genius. Now we realise that he's not that good.

But hey - he will remain a billionaire.

Wed, 11/30/2011 - 00:07 | 1928597 unununium
unununium's picture

Sorry, but JP did not even get lucky once.  He was merely the chosen arm's length patsy for Goldman insiders.  One step better than ACA Capital.

Tue, 11/29/2011 - 23:08 | 1928423 ZackLo
ZackLo's picture

Is that the feds balance sheet or a hedgefund prospectus? They look eerily similar...Must be greenscam!

Tue, 11/29/2011 - 23:08 | 1928424 Zero Govt
Zero Govt's picture

Paulson should not leave investing to chance

He should follow his brother, Wank ...when you place $Billion Dollar losing trades jump into head of the US Treasury and bailout your bankrupt institution, Goldman Sucks

Tue, 11/29/2011 - 23:16 | 1928440 pepperspray
pepperspray's picture

Best title of the day:

I Don't Think Tr. Sec. Paulson Gave Hedge Funds Inside Information

Tue, 11/29/2011 - 23:23 | 1928460 kito
kito's picture

paulsons gold fund up one percent, too funny. i guess simple gold wasnt esoteric enough for johnny boy. after all, who is going to pay the guy 20 percent a year to buy a bunch of bricks.........did he bundle the gold with subprime mortgages that were sure to bounce back, then leverage it, and then sell it as a gold fund?????

Tue, 11/29/2011 - 23:31 | 1928475 indio007
indio007's picture

Paulson must not be in the cool kid's club anymore for getting them exposed as as the scammers they are.


Hard to make a profit by using ability versus "connections" eh Paulson?

Tue, 11/29/2011 - 23:49 | 1928538 Spitzer
Spitzer's picture

lol,    " short these with leverage"

Must be Greenspan talking him into garbage

Wed, 11/30/2011 - 00:00 | 1928576 Wannabee
Wannabee's picture

"Our advice: short these with leverage"

Quote of the day, right there....

Tue, 11/29/2011 - 23:56 | 1928563 Richard Head
Richard Head's picture

In death, a member of Project Mayhem HAS a name.  His name was John Paulson.

Wed, 11/30/2011 - 00:02 | 1928581 Mentaliusanything
Mentaliusanything's picture

"Potential Return" - Banks, in this climate, with Bond markets going tits up and Cash harder to find than a virgin at a bikers picnic....

Mark it to zero with leverage

Wed, 11/30/2011 - 00:53 | 1928713 SillySalesmanQu...
SillySalesmanQuestion's picture

Short all the banks,,,and keep on shorting until Helicopter Ben can't print fast enough to prop them up....death to the bankster bitchez...

Wed, 11/30/2011 - 02:26 | 1928932 nah
nah's picture

whoda thunk, free money

Wed, 11/30/2011 - 02:45 | 1928956 chindit13
chindit13's picture

The FBI has an APB out for one Paolo Pellegrini, late of the Paulson Group of funds, and clearly absent without leave(ing any talent behind).  Good thing John isn't a Swiss Bank Director.  Those guys are individually and personally liable for a bank's losses.  Luckily, eleven or so billion probably still buys a gaggle of fawning acolytes.

I'm only saying this because I never forget the old adage that the market eventually discredits everyone who stays too long.  A person who makes $5 billion in a year ought to doff his cap and walk away, a la Barry Sanders, Sandy Koufax and Stanley Drunkenmiller.

Wed, 11/30/2011 - 03:39 | 1929018 vato poco
vato poco's picture

Awright, Gents, a question. I'm a simple, blue-collar septic-tank emptier with formica countertops in my doublewide. Somewhat new to this investing stuff, but learning fast - mostly thanks to this site, easily The Most Important Website On The Internet. (no sarcasm intended, & will be kicking in to the tip jar this xmas as a token of my gratitude)(which is saying something, since I'm a cheap SOB) Better yet, as much The Tylers teach me, you the commenters teach me as well. So! A question for y'all: If you're a Paulson client, or a client of somone similar who's got a good string of successful years with your $$, but then has a shit year as Paulson is.....Do you dump him for the Next Big Thing/the Next Hot Guy? After all, *plenty* of fish in the sea, no?

Or do you say, "anyone can have a bad year", and give him another chance? What's the correct play? Stick with the guy who's made you money - except for this year - or go the hardass route and say 'what have you done for me lately? You're fired.' And whatever your choice, Why??  Many Thanks.

Wed, 11/30/2011 - 04:23 | 1929051 delacroix
delacroix's picture


Wed, 11/30/2011 - 04:41 | 1929058 vato poco
vato poco's picture

True enough, Del. So let me rephrase the question: should a miracle occur, & we somehow get back to what might be considered "normal" financial times, where "normal" investing paradigms and guidelines sort of apply, do you dump your guy at the first bad month/quarter/year, or does he get a 2nd chance?

Wed, 11/30/2011 - 05:20 | 1929076 Tao 4 the Show
Tao 4 the Show's picture

If you are a pension fund or something similar forced into specific limited investing guidelines, you are an easy mark for the big guys who are devouring every pile of money they can find

If you are an individual investor, the big guys have data on your moves with the whatever line of thinking you follow. They have 10^9 times more money than you and will use all such advantages to take what you have.

If you invest with someone not in or no longer in their club, you are marked for decimation.

If you invest with someone in the club, like GS, you are still fodder for their execs who will feast on your losses.

If you are deeply insightful, very nimble, and have the ability to position counter trend for quick moves, you might make some money, but only by investing funds you can fully afford to lose. Understand that all the odds are aligned against you and they have cards you have not even imagined.

Wed, 11/30/2011 - 06:52 | 1929113 disabledvet
disabledvet's picture

given TD's track record which is even worse i think i'll avoid shorting with maximum leverage as well and just stick with a morning martini and go from there.

Wed, 11/30/2011 - 07:33 | 1929140 slaughterer
slaughterer's picture

SPY broke 50DMA on overnight gap thanks to PBOC.   
