You’ve heard the story before. It’s 2007, and while the rest of the world is blissfully buying up suburban McMansions, a quiet, unassuming guy in New York is betting the house against the American dream. That guy was John Paulson, and his firm, Paulson and Co, pulled off what is still widely called "The Greatest Trade Ever."
But honestly? Most people stop reading the script right there. They think of Paulson as a one-hit wonder who got lucky on a subprime mortgage collapse and then vanished into a mountain of gold. That’s not even close to the full story.
In reality, Paulson and Co has spent the last two decades morphing from a massive hedge fund juggernaut into something much more personal and, frankly, more interesting. As of 2026, the firm isn't even a traditional hedge fund anymore—it's a family office. That's a fancy way of saying John Paulson got tired of answering to grumpy investors and decided to only manage his own multi-billion dollar fortune.
The Trade That Changed Everything (And Why It’s Misunderstood)
The 2007-2008 windfall wasn't just a "bet." It was a clinical execution of a thesis that everyone else was too scared to touch. Paulson used credit default swaps (CDS) to short the subprime mortgage market. While the S&P 500 was cratering, his Credit Opportunities Fund soared by 590%.
His firm made $15 billion in a single year. Paulson himself took home about $4 billion. To put that in perspective, he basically made more money in twelve months than most small countries produce in a year.
But here’s the thing: he wasn't a "permabear." He didn't hate the economy. He just saw a math problem that didn't add up. Before the housing short, Paulson and Co was actually known for merger arbitrage. They were the guys who looked at corporate weddings—mergers and acquisitions—and bet on whether the deal would actually close. That DNA of looking for "event-driven" catalysts is still exactly how he invests today.
The Pivot to Gold and Pharma
If you look at the Paulson and Co portfolio recently, you won't find much housing debt. Instead, you'll find a weirdly specific "barbell" strategy. On one side, he’s obsessed with gold. On the other, he’s deep into speculative biotech and pharmaceuticals.
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Why gold? Because Paulson has spent years worrying about inflation and the devaluation of the dollar. While he’s been "early" (which is just a polite way of saying "wrong for a while") on some of these macro calls, his conviction hasn't budged. He holds massive stakes in names like Agnico Eagle Mines and Novagold Resources.
The Current Big Bets
By early 2026, the firm's 13F filings show a incredibly concentrated portfolio. He isn't diversifying. He's sniping.
- Madrigal Pharmaceuticals (MDGL): This has been a massive winner for him. He caught the wave of excitement around NASH (liver disease) treatments before it became a buzzy Wall Street topic.
- Bausch Health (BHC): This one has been more of a rollercoaster. He’s been a director there and has fought through the company's endless restructuring and debt issues.
- Perpetua Resources (PPTA): A huge bet on a gold and antimony mine in Idaho. It’s a classic "event-driven" play—waiting on government permits and the strategic need for domestic minerals.
Why He Went "Private"
In 2020, Paulson sent out a letter that shocked the industry. He was returning all outside capital. No more pension funds, no more endowments, no more wealthy dentists from Florida.
Why give back the money?
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Managing other people's cash is a headache. When you’re down 10%, they call you crying. When you’re up 50%, they ask why you weren't up 60%. By converting Paulson and Co into a family office, John Paulson gained the freedom to be as volatile as he wants. He can sit on a gold mine for ten years without having to explain the "quarterly drag" to a board of trustees.
The Puerto Rico Chapter
You can't talk about the modern era of Paulson and Co without mentioning Puerto Rico. Paulson became one of the island's biggest cheerleaders (and landlords). He bought the St. Regis Bahia Beach Resort and the Condado Vanderbilt Hotel.
He didn't just buy property; he moved there. He’s been a vocal advocate for the island's tax incentives, particularly Act 60. While critics call him a "vulture" for buying up distressed assets, he describes it as "rebuilding paradise." It’s a polarizing stance, but it fits his career-long pattern: go where the blood is in the streets and wait for the recovery.
Lessons from the Paulson Playbook
If you're looking to invest like Paulson and Co, you've gotta have a stomach made of iron. His style isn't for the faint of heart.
- Concentration is King: He doesn't believe in owning 500 stocks. He believes in owning 10 things you know better than anyone else.
- Asymmetric Risk: He looks for trades where the downside is limited but the upside is 10x or 50x. The housing trade was the ultimate version of this—the cost of the "insurance" (the CDS) was tiny compared to the payout if the market crashed.
- Ignore the Noise: In 2006, people told him he was crazy. In 2011, when he lost money on gold, people said he was "washed up." He seems to ignore both.
What’s Next for the Firm?
Looking ahead through 2026, expect Paulson and Co to stay quiet but aggressive. With his net worth hovering around $4 billion to $5 billion, he doesn't need to chase every trend. He’s waiting for the next "distortion."
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Whether it's a massive pharmaceutical merger or a geopolitical shift that finally sends gold to the moon, he’s positioned for the outlier event. He’s not playing the same game as the day traders on Reddit. He’s playing a game of decades.
To keep tabs on where this kind of "smart money" is moving, your best bet is to monitor SEC Form 4 filings. Since Paulson often sits on the boards of the companies he invests in (like Bausch Health), these filings reveal his personal purchases long before the news hits the headlines. You should also watch the 13F HR reports, which are filed 45 days after each quarter ends, to see the specific shifts in his family office's equity holdings.