2009-06-12 01:10:33
Is Paulson the Next Buffett?
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Warren Buffett used to be in a class by himself when it came to influencing the markets with his words and actions.
Thousands upon thousands of people flock to Omaha, Nebraska every year to hear him speak at the Berkshire Hathaway annual shareholders meeting.
The share prices of major companies rise and fall based on Buffett's moves. If he buys shares, the stock flies; if he sells, they usually suffer.
Investors fidget nervously if Buffett has a bearish view on the markets, and they enjoy a good night's sleep when he is bullish.
Warren Buffett is a legend. Nobody has the ears of more investors than Warren Buffett.
People always wondered if another investor would have the type of influence that Buffett has.
Would anyone else be able to post a similarly awe-inspiring track record?
Would anyone else have the clout and respect that Warren Buffett currently enjoys?
With each passing day, it appears as though that man might just be John Paulson.
Are investors intensely interested in anything that John Paulson has to say? Check.
Is John Paulson frequently quoted on various television shows and in numerous papers, all around the world? Check.
Can John Paulson dramatically influence the price of a stock when it is announced that he has bought a position in the company? Check. (CB Richard Ellis Inc recently rose 13% after it was announced that they were selling 13.4 million shares to Paulson and his firm).
Sure, John Paulson doesn't have anything close to the track record that Warren Buffett has. That's not my point.
My point is that investors are starting to give John Paulson the type of respect that they give Warren Buffett.
Paulson's views on the economy, inflation and the American real estate market are of major interest to many, many people. I am sure that there are many out there who are formulating their investment strategy entirely based on Paulson's views.
Who else other than Warren Buffett has that kind of an influence right now?
Buffett developed his reputation after many years of beating the markets.
Paulson has rapidly developed his reputation after posting eye-popping returns during the worst economic downturn of our generation. He currently predicted the collapse in the subprime mortgage market and profited (handsomely) from it.
His funds posted enviable returns during a year (2008) when both the markets in general and the hedge fund industry were completely obliterated. Those who felt that Paulson would be a one-hit wonder were proven wrong.
In 2009, Paulson's flagship fund is up nearly 10% while the markets in general are pretty much unchanged.
Paulson's firm now has an enormous $20 billion plus in total assets under management, which makes it one of the largest hedge funds in the world.
Can Paulson continue to destroy the returns of the S&P 500 over the long-term, just like Warren Buffett did? That remains to be seen.
Will Paulson have a strong run and then eventually flame out, as many other high-profile hedge fund managers have done in the past? That remains to be seen as well.
One thing is for certain though - as it stands right now, John Paulson is certainly one of the most respected and listened-to investors in the world right now.
Filed under: General Knowledge
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