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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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Thu, 08/23/2012 - 12:40 | 2730665 BaBaBouy
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...

Thu, 08/23/2012 - 12:45 | 2730754 flaunt
flaunt's picture

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

Thu, 08/23/2012 - 12:56 | 2730789 Stoploss
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..

 

Thu, 08/23/2012 - 13:05 | 2730829 Biggvs
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.

Thu, 08/23/2012 - 13:32 | 2730952 AlaricBalth
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).

Fri, 08/24/2012 - 03:09 | 2732847 piliage
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.

Thu, 08/23/2012 - 12:46 | 2730755 Dalago
Dalago's picture

Indirectly messing with GLD... Ya bastids!

Thu, 08/23/2012 - 12:48 | 2730763 Tippoo Sultan
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.

Thu, 08/23/2012 - 13:32 | 2730951 ZeroPoint
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.

 

 

Thu, 08/23/2012 - 22:13 | 2732459 davey
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.

Fri, 08/24/2012 - 03:01 | 2732840 piliage
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'?

 

Thu, 08/23/2012 - 12:26 | 2730671 malikai
malikai's picture

Welcome to "The Suck" Mr. Paulson.

Thu, 08/23/2012 - 12:27 | 2730672 Doubleguns
Doubleguns's picture

former Bear Stearns trader

 

Sometimes the bear wins.

Thu, 08/23/2012 - 12:44 | 2730745 falak pema
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! 

Thu, 08/23/2012 - 12:27 | 2730673 Bam_Man
Bam_Man's picture

A One Hit Wonder.

Thu, 08/23/2012 - 12:27 | 2730674 Bam_Man
Bam_Man's picture

A One Hit Wonder.

Thu, 08/23/2012 - 12:30 | 2730692 tocointhephrase
tocointhephrase's picture

You had to do it twice!

Thu, 08/23/2012 - 12:36 | 2730715 New_Meat
New_Meat's picture

A two hit wonder?

Thu, 08/23/2012 - 12:28 | 2730681 q99x2
q99x2's picture

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

Thu, 08/23/2012 - 12:29 | 2730682 casaananda
casaananda's picture

Did he not do well holding gold?

Thu, 08/23/2012 - 12:29 | 2730685 Hype Alert
Hype Alert's picture

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

Thu, 08/23/2012 - 12:30 | 2730691 Dr. Richard Head
Dr. Richard Head's picture

Corzine will fill that hole.

Thu, 08/23/2012 - 12:31 | 2730694 tocointhephrase
tocointhephrase's picture

No...I wont go there

Thu, 08/23/2012 - 12:32 | 2730700 malikai
malikai's picture

Poof!

Thu, 08/23/2012 - 12:31 | 2730696 resurger
resurger's picture

No! i cant be ABXed!

Thu, 08/23/2012 - 12:32 | 2730698 hedgeisforpussies
hedgeisforpussies's picture

better be lucky than smart. 

Thu, 08/23/2012 - 12:33 | 2730701 AnarchoCapitalist
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.

Thu, 08/23/2012 - 12:43 | 2730742 vortex
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

Thu, 08/23/2012 - 12:35 | 2730707 youngman
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..

Thu, 08/23/2012 - 18:20 | 2731896 FRBNYrCROOKS
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!

Thu, 08/23/2012 - 12:36 | 2730713 TruthInSunshine
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

 

Thu, 08/23/2012 - 12:36 | 2730714 I am a Man I am...
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.

Thu, 08/23/2012 - 12:38 | 2730724 YesWeKahn
YesWeKahn's picture

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

Thu, 08/23/2012 - 12:38 | 2730725 Arnold Ziffel
Arnold Ziffel's picture

he is being "Zukerbergered."

Thu, 08/23/2012 - 12:41 | 2730736 malikai
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".

Thu, 08/23/2012 - 13:22 | 2730903 hidingfromhelis
hidingfromhelis's picture

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

Thu, 08/23/2012 - 12:40 | 2730731 falak pema
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!

Thu, 08/23/2012 - 12:40 | 2730734 long-shorty
long-shorty's picture

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

Thu, 08/23/2012 - 12:43 | 2730739 aleph0
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

Thu, 08/23/2012 - 12:55 | 2730786 Missiondweller
Missiondweller's picture

Neue Euro-Sheisse!

Thu, 08/23/2012 - 13:04 | 2730837 magpie
magpie's picture

What ? No 1000 or 2000 bill ?

Thu, 08/23/2012 - 12:42 | 2730740 adr
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.

Thu, 08/23/2012 - 12:51 | 2730770 Christoph830
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.

Thu, 08/23/2012 - 12:44 | 2730748 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Where's Paolo Pellegrini when you need him?

Thu, 08/23/2012 - 12:51 | 2730771 Jim in MN
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.

Thu, 08/23/2012 - 12:52 | 2730775 Extremist Tan
Extremist Tan's picture

Canary?

Thu, 08/23/2012 - 12:53 | 2730777 Missiondweller
Missiondweller's picture

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

Thu, 08/23/2012 - 12:55 | 2730783 Dubaibanker
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?

Thu, 08/23/2012 - 13:17 | 2730883 chrisd
chrisd's picture

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

Thu, 08/23/2012 - 13:17 | 2730884 NEOSERF
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..

Thu, 08/23/2012 - 13:34 | 2730964 highwaytoserfdom
highwaytoserfdom's picture

Gee in 08 when we could not short the banks but Paulson could short the abx markets?  One less bozo  suits me fine. 

Thu, 08/23/2012 - 13:40 | 2730991 sbfeibish
sbfeibish's picture

If I'd invested with his hedge funds I'd pull my money because he invested in GLD instead of bullion.  Then I'd buy bullion.  I hope that's what happens.

Thu, 08/23/2012 - 14:33 | 2731211 web bot
web bot's picture

You get it.

+1000

Thu, 08/23/2012 - 13:49 | 2731028 Lost Wages
Lost Wages's picture

Paulson is bound to be wrong about Las Vegas real estate too. There's no way it has bottomed yet. Everyone might as well redeem & put him out of his misery before that investment loses him another 20-40%.

Thu, 08/23/2012 - 13:59 | 2731064 Venerability
Venerability's picture

ZH dares to make a smarmy, nasty post like this simultaneously with CNBC starting another one of their Fantasy Finance contests and Yahoo all of a sudden "redoing" their boards of stocks with trapped Short positions, preventing any actual human beings from posting.

If we had not seen this little gaming scenario so many times before, we might take it much more seriously.

And why does it always coincide with findings that hedge funds in general have done far worse than "average" investors and traders?

The only problem with the market is the same one plaguing it for decades now: No Chinese Walls and financial media under the domination - and often outright ownership - of hedgies who almost always operate from the Short side.

On the bright side: The Psychopaths pull one of these coordinated actions these days, it almost always means something very GOOD - i.e. something about to bleep the Shorts hard - is waiting in the wings.

And re linking Mr. Paulson with Bear: I do not know Mr. Paulson personally and am not defending him.

But he was a contemporary at Bear with your (insane) hero Larry Kudlow, I believe.

Meanwhile Little Larry's "good buddy" Dr. Malpass WAS there during the worst of the Bear crisis and involved in it up to his smarmy little forehead, I believe.

So I wouldn't throw around links to Bear casually like that.

In fact, readers might want to read the Wikipedia piece on Dr, Malpass, an essay in high satire.

Thu, 08/23/2012 - 14:24 | 2731167 ZeroPoint
ZeroPoint's picture

How much salary do you make on Paulson defense team?

Thu, 08/23/2012 - 14:13 | 2731131 vote_libertaria...
vote_libertarian_party's picture

Maybe everybody is reading this wrong.

 

Maybe Citi needs some cash because all of the defaulting loans they are sitting on in Tier III assets is causing a pinch.

Thu, 08/23/2012 - 15:16 | 2731384 Quinvarius
Quinvarius's picture

Wow.  The Paulson redemption rumor again.  What a surprise.  As often as this one is used, there is no way Paulson can have any money left to manage.

Thu, 08/23/2012 - 23:56 | 2732660 TheObsoleteMan
TheObsoleteMan's picture

So what, Paulson will have to sell off some GLD shares, what does that prove? It's the spot price for physical that controls the price of GLD, not the other way around. Besides, Citi is not what you would call a braintrust. Buy high, sell low is the secret to their success, selling out of gold, just as it is roaring back after being flat for a year. They get what they deserve.

Fri, 08/24/2012 - 03:10 | 2732850 dust to dust
dust to dust's picture

 Who is the first to take the big bite out of AAPL? Time frame any one; all that is left is a chewed up core, stem and some seeds. Maybe seeds will take hold in some parched soil.  

Fri, 08/24/2012 - 06:29 | 2732972 Grand Supercycle
Grand Supercycle's picture

SPX / DOW / NASDAQ / DAX / FTSE choppy daily charts are still breaking down.

http://www.zerohedge.com/news/2012-12-24/market-analysis

Do NOT follow this link or you will be banned from the site!