The Beginning Of The End For John Paulson?

Tyler Durden's picture

Because redemption requests are like cockroaches: once one appears, assume many, many more:

  • CITIGROUP'S PRIVATE BANK SAID TO PULL $500M FROM PAULSON FUNDS - BBG
  • CITIGROUP SAID TO REDEEM FROM PAULSON ADVANTAGE, ADVANTAGE PLUS - BBG

Is this the beginning of the end for the former Bear Stearns M&A banker and once infallible hedge fund manager? And to think he could have saved himself all the deep fundamental work telling him Las Vegas real estate is "cheap" and just bought Apple. Hey, everyone else is doing it. And everyone else can't possibly be wrong. As for Paulson, whose GLD holdings, which are not an investment but merely a gold denomination share class, will likely quite soon see a substantial hit as he is forced to unwind GLD holdings as more and more external investors redeem until finally JP is just left running his own and his employees' money.

Finally, recall what we said three days ago when we broke the Goldman report that only 11% of HFs are outperforming the S&P: "the day of redemption reckoning at the end of the year (and just after September 30 for that matter as well) could be the most painful yet. it also explains why, just like every other quarter in which career risk is at all time highs, HFs are dumping everything not nailed down and buying up AAPL, which as of June 30 was held by an all time high 230 hedge funds (more on that later)."

For Paulson D-Day may have arrived. It is also coming for hundreds of other underperforming funds who will now have to shift from net buyer to gross liquidator as their LPs demand their cash back ahead of the September 30 redemption deadline. Add that technical consideration to all the other September sell off woes.

In short - he who redeems first, redeems best.

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BaBaBouy's picture

Sometimes Life is So Simple ...

Just Buy GOLD (Real Physical, and avoid the Tungsten)...

 

(They can only Sell The FT. Knox GOLD 5 Times over before everyone finally catches on).

Then we Ramble...

flaunt's picture

More like SELL gold short term, given that Paulson has almost half his billions in gld.

Stoploss's picture

Somebody might wnat to get the LAZY FUCKING CONGRESS BACK TO WORK NOW...............

Better yet, don't come back, EVER.......... The country has already quit on you any way..

 

Biggvs's picture

Gold is already celebrating Paulson's imminent exit with a 2% rally. I wonder if he can get GLD to start selling at a big discount to NAV.

AlaricBalth's picture

Paulson's 8/14/2012 13F filing for his flagship fund. http://www.sec.gov/Archives/edgar/data/1035674/000116660412000010/0001166604-12-000010.txt

21,837,552 of shares of GLD. 28.29% of portfolio in one position. Plus other ancillary gold holdings = 44.31%, as ZH has stated before.

Plus just made a big bet on Delphi Automotive (DLPH).

piliage's picture

OK. GLD is 400mil or so shares, and paulson has 20 million of those, roughly 5%. If he unwinds, duck and cover, or perhaps BTFDYFI, as physicial gold will be hit too.

Dalago's picture

Indirectly messing with GLD... Ya bastids!

Tippoo Sultan's picture

Paulson a large holder/now liquidator of PM ? Said stock is down brutally hard on no news; Philip Morris is also a member of the Hedge Hotel 50.

ZeroPoint's picture

It's well known Paulson has a huge GLD position. I wonder what's going to happen when he realizes there is no physical backing it up.

 

 

davey's picture

John Paulson was right the first time during the financial crisis and the investors were scared then only to become very rich by him. Mark my words he is right again. Do you really think citi bank even has a clue? Gold is going to 2000 within 6 months.

piliage's picture

Paulson is probably right. But when? That is the problem with timing a short.

Marc Faber lost a ton of money (30-40% allegedly) until the NASDAQ rolled over and died and has admitted timing a short is one of the hardest things to do well. This is the same thing that Kyle Bass is going through right now in his Japan positions. The logic is irrefutable, but how much can you stand to lose being 'right'?

 

malikai's picture

Welcome to "The Suck" Mr. Paulson.

Doubleguns's picture

former Bear Stearns trader

 

Sometimes the bear wins.

falak pema's picture

a good sailor never confuses stern with bow. And never bears a bull on his own two frail shoulders! 

Balance your bets, or you lose your family jewels on the bull's horns! 

Cornada! 

Bam_Man's picture

A One Hit Wonder.

Bam_Man's picture

A One Hit Wonder.

q99x2's picture

Once his money is gone, arrest him and throw him into prison. Same with Zuckerberg.

casaananda's picture

Did he not do well holding gold?

Hype Alert's picture

Bear Stearns?  Hey, aren't they the one's that had those two funds that "nearly" collapsed?

Dr. Richard Head's picture

Corzine will fill that hole.

resurger's picture

No! i cant be ABXed!

hedgeisforpussies's picture

better be lucky than smart. 

AnarchoCapitalist's picture

Paulson is a HUGE holder of GLD, if he starts getting redemption requests, we could see a massive short term dip in GLD. Heads up.

vortex's picture

Yes and if this is the only thing that the club can do to put the genie back in the bootle.. they are finished... 

What a bunch of losers... and this is the elite of western civilization... Give me a break...

 

vvvvv

youngman's picture

I think a lot of people will be pulling out before the big cliff hits capital gains and whatever....where they go no one knows....but only 3% are invested in PM´s..

FRBNYrCROOKS's picture

I was thinking the same. Congress won't do dick for fear of helping Barry get re-elected and there will be a sell-off as Cap. Gains goes from 15% to 20%. Short SnP bitchz!

TruthInSunshine's picture

-

 

John Paulson sat on a wall

John Paulson had a great fall

All the past Abacus's done with Blankfein's men

Couldn't put John Paulson back together again

 

I am a Man I am Forty's picture

LMAO.  Citigroup can't manage their own fucking money.  Not even Paying 2 and 20.  Paying 2 and losing. Hilarious.

YesWeKahn's picture

I was so sure that I was inferior to Paulson, now I think I can do as well as him.

Arnold Ziffel's picture

he is being "Zukerbergered."

malikai's picture

Not so fast! FB is up two days in a row so far. Clearly, this is the turn around and beginning of the "Great Facebook Bull Run of 2012".

hidingfromhelis's picture

I've been hearing that about real estate for the last several years.  Maybe this time is different.

falak pema's picture

but but but John Paulson is one of the magnificent three attacking the EUrooooo; with ROthschilds's child and Soros's eternal horror show!

long-shorty's picture

isn't like $12 billion or some such of Paulson's AUM actually owned by Paulson and staff?

aleph0's picture

Off Topic .. for a mo :

Speculation on the new Euro notes, planned for 2013 :

English translation: New euro notes
http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=...

German Source : Neue Euro-Scheine

http://www.mmnews.de/index.php/wirtschaft/10671-neue-euro-scheine

 

FWIW

magpie's picture

What ? No 1000 or 2000 bill ?

adr's picture

Even the great ones will find out that the only way to really win the game was not to start playing at all.

Christoph830's picture

Exactly.  He had an epic run at the blackjack table and felt he could continue to beat the House.  Should have just walked away on top.

NeedleDickTheBugFucker's picture

Where's Paolo Pellegrini when you need him?

Jim in MN's picture

Just in, NYTimes: China's inventory glut masked by governmental suppression of facts.

 

Protip: Read and save this info before it is changed/deleted at the behest of our benevolent Overlords.

 

http://www.nytimes.com/2012/08/24/business/global/chinas-economy-besiege...

China Besieged by Glut of Unsold Goods

 

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.

Missiondweller's picture

After the move in gold those folks might want to rethink.

Dubaibanker's picture

But why would a Private Bank invest their own money into a Hedge Fund? 

Or are we talking client money? If so, then how can Citi pull it out without client consent and make it public info?

If it is discretionary, then why the public pronouncement?

Something is fishy here...What is it?

chrisd's picture

Someone needs to get Paolo back in the fold, stat!

NEOSERF's picture

Hmmm, how bad doe the clouds need to get before the 240 hedgefunds start trying to go through the Apple exit door together.  This smells different than the usual BTFDs of the last 9 months..