Despite the island commonwealth’s financial woes, or perhaps even because of them, tropical Puerto Rico has been garnering a good bit of attention from global hedge funds the last few years.
In the most recent news on Thursday of this week, John Paulson’s hedge fund Paulson & Company announced it had acquired the San Juan Beach Hotel in Puerto Rico for around $20 million. Apparently, the historic hotel will be rebuilt and and converted into an “ultraluxury boutique hotel” over the next several months..
ValueWalk's Raul Panganiban interviews Dr. Kathryn Kaminski, Chief Research Strategist at AlphaSimplex, and discuss her approach to investing and the trends she is seeing in regards to quant investing and hedge funds. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with AlphaSimplex's Read More
Of note, Paulson & Company are one of the most active of large hedge funds such as Och-Ziff Capital Management, Blue Mountain Capital Management and Appaloosa Management that have made investment in Puerto Rico recently. Just a couple of years ago, PR government debt was the hottest trade in the hedge fund world as investors bought hundreds of millions of dollars of government debt in its struggling utility and other government institutions.
The commonwealth’s finances, however, have not improved in the last year. In fact, Puerto Rico Governor Alejandro García Padilla publicly admitte in mid-June that the island simply could not pay all of its more than $72 billion debt on time.
Statement from Puerto Rico Governor Garcia Padilla
“Our economic development plan is working, and we will continue to grow the economy, attract investments and create jobs,” Governor García Padilla said in a statement welcoming Paulson & Company’s investment in the commonwealth.
Paulson & Company making substantial investment in Puerto Rico
The ongoing economic meltdown has not deterred Paulson from continuing to buy real estate on the island. Analysts note he has snapped up some of the most exclusive hotels on the island, such as the Condado Vanderbilt Hotel, La Concha Renaissance Hotel and Tower and the St. Regis Bahia Beach Resort. Sources note Paulson is also building a multi-million dollar vacation home in Puerto Rico.
Paulson is apparently also working as an unofficial adviser to the government. Officials from Puerto Rico attended the hedge fund industry’s biggest event — the SkyBridge Alternatives Conference in Las Vegas — this year at his suggestion. Sources say the officials had several meetings with hedge fund executives.