John Paulson’s hedge fund company, Paulson & Co., is in the headlines again over losing investor’s money. However, this time, it’s not Paulson’s fault, as the Paulson & Co. we are reporting on today isn’t actually his hedge fund. Rather, it is an elaborate scam set up by a father and son in Florida.
They opened a fake investment company called Paulson & Co., and used it to scam more than $4 million from investors. The pair of suit wearing thieves were slick as motor oil in claiming to be an affiliate of the real Paulson & Co., and gaining investor’s trust. They claimed to be investing in a very promising futures program, according to Forbes, and further entangled themselves by claiming they were under the control of Paulson.
The Bedford Park Opportunities Fund returned 13.5% net of all fees and expenses in the second quarter of 2021, bringing its year-to-date return to 27.6%. Q2 2021 hedge fund letters, conferences and more In the fund's second-quarter investor letter, which ValueWalk has been able to review, Jordan Zinberg, the President and CEO of Bedford Read More
John and Jeffrey Fowler were good at keeping their operation going, that is, until it all went south in November of last year. The two now face prison terms, with the father, John, looking at 20 years, and the son, Jeffrey, facing a possibility of 5.
The irony of this story is found in the fact that Paulson’s real hedge fund has suffered dramatic losses in the last two years, as we have reported here on ValueWalk. The fund dropped 50% last year, and as we reported in August, it had lost another 18% so far this year. These losses were due largely to mistakes in investing by the management of the fund.
John Paulson is one of the most well known investors on the Street, and overall, has shown remarkable intuition in his investment strategy. While he may have suffered losses in the previous two years, almost any value investor will tell you that Paulson is one of the smartest people on Wall Street. After all, no one can be right 100% of the time.
While the news of this scam will most assuredly make investors wary of anyone claiming to be Paulson’s affiliate, it’s doubtful that it will cause any lasting damage to the hedge fund guru. It’s now know that he was in no way affiliated with the two criminals, and though they stole money and spent it on themselves, he had nothing to do with the scam. The staff at ValueWalk holds John Paulson in high esteem, and we look forward to seeing his hedge fund rebound over the next few quarters as changes are made in investment strategies.