John Paulson Changes Equity Positions

It’s easy to understand why John Paulson of Paulson & Co., is cashing out of the banking business in the third quarter. John Paulson decided to sell completely out of Goldman Sachs Group Inc., and significantly trimmed Paulson & Co.’s stock in Bank of America Corp., Wells Fargo & Co. and Citigroup.

John Paulson backs away from the Banking Business
The same policies which led them to the wildly profitable for so long have resulted in legal and governmental troubles. Faulty mortgages, risky hedge funds, dishonest credit card practices and even foreclosure fraud have brought down government wrath on these companies. John Paulson and Paulson & Co. took full advantage of the former profits. Paulson & Co. however, want nothing to do with the ensuing penalties, which these banks are about to incur in the form of regulation and penalties. There is even the possibility they may be forced to buy back those bad mortgages.

John Paulson chose to sell 29{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of Paulson & Co.’s JP Morgan Chase stock, 18{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of their Bank of America stock, 16{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of Paulson & Co.’s Citigroup stock, and 11{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of their Wells Fargo stock, as well as 100{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of the Paulson & Co.’s Goldman Sachs holdings. The six largest U.S. banks lost an average of 8{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} in their net revenue in the third quarter, and that was enough of an indicator for John Paulson.

Gold is Old News
John Paulson was one of the early investors in gold. Paulson & Co. really setting the tone for much of the gold buying which has become so popular, however that was all about timing and though there could still be increase in value, odds are the market is topping out on gold. Paulson & Co. has made a considerable fortune investing in gold including John Paulson and Paulson & Co.’s extensive purchase of impaired Gambriel stocks which proved to be extremely profitable, mostly due to creating an inflated stock, from an obviously impaired one. The Gambriel gold mine in Romania has been closed for over 10 years, but the stock went up substantially.

Timing was everything however. Now John Paulson is just waiting for right moment for the pay off. With the recession drawing to a close, gold stocks could gradually dwindle in popularity. Paulson & Co. made their bets on gold due to certain conditions early in 2009, and now it’s getting close to cash in time. There is still money to be made, but the time to invest was well over a year ago.

John Paulson Suggests Real Estate
Billionaire John Paulson was very recently quoted as saying, “If you don’t own a home, buy one. If you own one home buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” Now is the time to buy homes. Low interest rates and low prices make it a great time to invest in homes. While prices may drop a little more, the interest rates will rise again soon, so the difference in interest rates will cost more than any slight drop in prices. As John Paulson of Paulson & Co. explains it, when something of real and lasting value is for sale at a low price, it’s time to buy.


  1. jeremy January 11, 2011
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  5. Lionel Aybar March 4, 2011
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