John Paulson

John Paulson
Born	John Alfred Paulson 14 12, 1955
Birthplace	New York City, U.S.
Nationality	American
Occupation	Hedge fund manager, investor
Known for	Founder of Paulson & Co.; shorting the U.S. subprime mortgage market in 2007
Education	Harvard University (MBA)
Children	3

John Alfred Paulson (born December 14, 1955) is an American billionaire hedge fund manager and the founder of Paulson & Co., a New York City–based investment management firm established in 1994. Paulson rose from relative obscurity in the financial world to international prominence in 2007, when he used credit default swaps to bet against the U.S. subprime mortgage lending market—a trade that earned him an estimated $4 billion personally and approximately $15 billion for his funds, transforming him, in the words of financial observers, "from an obscure money manager into a financial legend." In 2010, he earned an additional $4.9 billion, making him one of the highest-earning hedge fund managers in history. Beyond finance, Paulson has been a significant philanthropist, notably donating $100 million to New York's Central Park Conservancy in 2012, and has been active in American political life as a donor and economic adviser. Forbes estimated his net worth at $3.8 billion as of August 2025.

Early Life

John Alfred Paulson was born on December 14, 1955, in New York City. He grew up in the borough of Queens, in a middle-class family. His father, Alfred G. Paulson, was a chief financial officer for a small industrial company. The family had European roots, and Paulson was raised in an environment that emphasized education and professional achievement.

Growing up in Queens, Paulson attended local public schools. From an early age, he demonstrated an aptitude for numbers and business. His upbringing in one of New York City's outer boroughs—far from the elite circles of Manhattan finance—would later become a notable element of his personal narrative, as journalists and biographers contrasted his modest origins with the enormous wealth he would accumulate through his career in hedge fund management.

Education

Paulson attended New York University (NYU), where he earned a bachelor's degree. He graduated first in his class from NYU's College of Business and Public Administration (now the Stern School of Business). His outstanding academic performance at NYU earned him recognition and laid the groundwork for his admission to one of the country's most prestigious graduate programs.

Paulson subsequently enrolled at Harvard Business School, where he earned his Master of Business Administration (MBA). He graduated from Harvard as a Baker Scholar, a distinction reserved for the top five percent of the graduating class. His education at both NYU and Harvard provided him with the analytical framework and professional network that would prove instrumental in his subsequent career in investment management.

Career

Early Career and Founding of Paulson & Co.

After completing his MBA at Harvard Business School, Paulson worked in investment banking and at several investment firms, gaining experience in mergers and acquisitions as well as risk arbitrage—a specialty involving the analysis of corporate transactions such as mergers, acquisitions, and restructurings to identify pricing inefficiencies.

In 1994, Paulson founded Paulson & Co., a New York–based investment management firm specializing in merger arbitrage and event-driven strategies. The firm started modestly, managing a relatively small pool of capital compared to the larger established hedge funds of the era. Through the mid-to-late 1990s and into the early 2000s, Paulson steadily grew the firm's assets under management by delivering consistent returns to investors, though he remained largely unknown outside the professional hedge fund community.

The Subprime Mortgage Trade (2005–2008)

Paulson's defining career achievement came through his analysis of the U.S. housing market in the mid-2000s. Beginning around 2005, Paulson and his team at Paulson & Co. grew increasingly concerned about the rapid expansion of subprime mortgage lending and the proliferation of mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) built upon pools of risky home loans. At the time, the prevailing consensus on Wall Street and among credit rating agencies was that the U.S. housing market was fundamentally sound and that widespread defaults were unlikely.

Paulson reached a different conclusion. He and his analysts identified what they believed to be systemic weaknesses in the subprime mortgage market, including deteriorating lending standards, the growing prevalence of adjustable-rate mortgages issued to borrowers with poor credit histories, and the overvaluation of mortgage-backed securities by rating agencies. To act on this thesis, Paulson created two dedicated funds—the Paulson Credit Opportunities Funds—designed to profit from a collapse in subprime mortgage values.

The primary instrument Paulson used to execute the trade was the credit default swap (CDS), essentially an insurance contract that pays out when a referenced bond or security defaults. By purchasing credit default swaps on mortgage-backed securities and CDOs that he believed were likely to fail, Paulson constructed a massive short position against the subprime mortgage market. The cost of these credit default swaps was relatively low at the time, as most market participants did not anticipate widespread defaults.

When the subprime mortgage market began to deteriorate in 2007 and subsequently collapsed during the broader financial crisis of 2007–2008, Paulson's funds reaped enormous profits. The Paulson Credit Opportunities Fund reportedly returned approximately 590 percent in 2007. Paulson's personal earnings for the year were estimated at nearly $4 billion, and his funds generated approximately $15 billion in total profits from the trade. The scale of the gains made Paulson one of the highest-earning individuals in the history of finance for a single year and drew comparisons to George Soros's famous 1992 bet against the British pound.

The trade catapulted Paulson from relative anonymity to the upper echelon of the hedge fund industry. Financial journalist Gregory Zuckerman later chronicled the trade in detail in his book The Greatest Trade Ever (2009), cementing the episode's place in financial history.

Post-Crisis Investments and Gold

Following the success of his subprime trade, Paulson & Co.'s assets under management grew substantially, reportedly reaching over $30 billion at its peak. Paulson subsequently made several large-scale investment bets in the years following the financial crisis.

One of the most prominent was Paulson's significant investment in gold and gold-related assets. In 2009 and 2010, Paulson established a gold-denominated share class for his funds and took large positions in gold mining companies and gold exchange-traded funds. The rationale behind this investment was Paulson's belief that the massive monetary stimulus programs undertaken by central banks in response to the financial crisis would ultimately lead to significant inflation and a devaluation of paper currencies, driving up the price of gold. This bet proved profitable in the short term as gold prices rose to record highs in 2011.

In 2010, Paulson earned approximately $4.9 billion in personal compensation, making him the highest-earning hedge fund manager that year.

However, some of Paulson's subsequent investments did not replicate the success of his subprime trade. Several of his post-crisis bets experienced significant losses in subsequent years, and the firm's assets under management declined from their peak levels. Paulson & Co. continued to operate as an investment management firm, employing event-driven and value-oriented strategies across a range of sectors.

Transition to Family Office

In recent years, Paulson & Co. has transitioned from a traditional hedge fund to operating more as a family office, managing primarily Paulson's personal and family wealth. Despite this shift, Paulson has continued to make notable investments across multiple sectors. Public filings in late 2025 showed Paulson making strategic adjustments to his portfolio, including significant positions in pharmaceutical companies such as Bausch Health Companies and Madrigal Pharmaceuticals.

Paulson has also held investments in the mining sector. In October 2025, Forbes reported that Paulson held a stake in Trilogy Metals, a small mining company whose share price tripled after news of a government investment, resulting in a significant financial windfall for Paulson.

Political Involvement

Paulson has been active in American political life, primarily as a donor and adviser aligned with the Republican Party.

Paulson was one of the earliest prominent Wall Street figures to support Donald Trump's political campaigns. In 2016, he was named to Trump's economic advisory team, joining a group of wealthy businessmen assembled to advise the campaign on economic policy. Bloomberg News reported in November 2016 that Paulson's early support for Trump represented a strategic bet that yielded both political influence and potential financial benefits. Vanity Fair reported that Paulson's close relationship with the incoming Trump administration positioned him to have influence over economic and financial policy decisions.

Paulson's political associations have at times drawn scrutiny. In February 2026, The Guardian reported that Paulson, who had publicly presented himself as an advocate for domestic manufacturing, was planning to close a factory operated by Conn-Selmer in Ohio and move production to China. Workers at the plant criticized the decision, noting the contradiction between Paulson's public statements about onshoring and the company's actions.

Personal Life

Paulson has three children.

Paulson has resided in New York City for most of his adult life. He has owned a townhouse at 9 East 86th Street on Manhattan's Upper East Side, one of the most prominent residential properties in the city.

In September 2025, Washington Square News, NYU's student newspaper, reported that Paulson's name had appeared in Jeffrey Epstein's contact list, which had become public. The report noted that Paulson was a major NYU donor and a member of the Stern School of Business board. The listing in the contact book did not, by itself, imply any wrongdoing.

Philanthropy

Paulson has been a significant philanthropist, directing donations to educational institutions, conservation efforts, and cultural causes.

In October 2012, Paulson made a $100 million donation to the Central Park Conservancy, the nonprofit organization that manages Central Park in New York City. At the time, it was the largest single donation in the Conservancy's history and one of the largest gifts ever made to a public park. The donation was intended to support the park's ongoing maintenance and improvement.

Paulson has also been a major donor to his alma mater, New York University, particularly to the Stern School of Business, where he has served on the board.

Through the Paulson Foundation, his family's charitable organization, Paulson has directed funding to international educational institutions. In early 2026, eJewish Philanthropy reported that the Paulson Foundation had made an additional donation to the Hebrew University of Jerusalem for STEM programs at the university's Givat Ram campus, bringing the foundation's total contributions to the institution to $46 million—one of the largest donations in the university's history.

Recognition

Paulson has been described as "one of the most prominent names in high finance." His 2007 short against the subprime mortgage market is considered one of the most profitable trades in the history of Wall Street, and it was the subject of extensive media coverage and the book The Greatest Trade Ever by Gregory Zuckerman, published in 2009.

His academic achievements include graduating first in his class from NYU's business school and earning the distinction of Baker Scholar at Harvard Business School, placing him in the top five percent of his graduating class.

Paulson's $100 million gift to the Central Park Conservancy was one of the largest charitable donations to a public park in U.S. history and generated significant media attention when it was announced in 2012.

Forbes has consistently listed Paulson among the wealthiest individuals in the United States, estimating his net worth at $3.8 billion as of August 2025.

Legacy

John Paulson's place in financial history rests primarily on his 2007 trade against the U.S. subprime mortgage market. The trade, which generated approximately $15 billion in profits for his funds and nearly $4 billion for Paulson personally, is among the most profitable single investment theses ever executed. It demonstrated the potential for contrarian analysis to generate extraordinary returns and highlighted the systemic risks that had accumulated in the U.S. mortgage market in the years preceding the 2007–2008 financial crisis.

The trade also raised broader questions about the role of hedge funds and financial derivatives in the global financial system. While Paulson's analysis of the subprime market's weaknesses proved prescient, the instruments he used—credit default swaps—were themselves part of the complex web of financial products whose opacity and interconnectedness contributed to the severity of the financial crisis. The episode became a case study in business schools and a reference point in debates about financial regulation, market structure, and the ethics of profiting from economic distress.

Beyond the subprime trade, Paulson's career illustrates both the opportunities and challenges of hedge fund management. His post-crisis investments in gold and other assets demonstrated the difficulty of replicating a singular success, while his transition from managing outside capital to operating a family office reflected broader trends in the hedge fund industry.

Paulson's philanthropic activity, including his landmark donation to Central Park and his ongoing support for educational institutions, has also formed part of his public legacy, placing him within a tradition of prominent financiers who have directed substantial portions of their wealth toward charitable causes.

His political involvement, particularly his early and sustained support for Donald Trump, positioned him as one of the most prominent Wall Street figures in Republican political circles during the late 2010s and 2020s.