Too Big to Succeed Hedge Fund
Has Paulson's Hedge Fund Become 'Too Big to Succeed'John Paulson's hedge fund, Paulson & Co., began 2010 managing $32 billion and investor interest has only increased. Paulson's fund has performed impressively recently, most notably in predicting the subprime mortgage meltdown. With more money flowing in from new investors, a recent article wonders whether Paulson & Co has become "too-big-to-succeed," meaning the hedge fund firm will not be able to keep up its past performance and satisfy all its investors.
John Paulson started the year overseeing $32 billion in hedge funds, third in the world behind JPMorgan Chase & Co. and Bridgewater Associates LP. Unlike many of his biggest rivals, he’s taking in new cash, raising the question of how much money is too much for a hedge-fund manager.
“There’s no doubt that Paulson is a big draw for investors at the moment,” said Richard Tomlinson, founder of London-based Tomlinson Investment Consulting, which advises clients on hedge funds. “As with all managers that bulk up, there’s always the risk of returns becoming mediocre.”
Paulson & Co., the New York-based firm that the former Bear Stearns banker and Gruss Partners trader started in 1994, differs from many large competitors because it makes concentrated bets, such as the wager against subprime mortgages that helped generate $3 billion of profit in 2007. Source
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