John Paulson set to earn up to 78% return on investment in Lehman Brothers bonds

May 14th, 2011
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John Paulson’s hedge fund Paulson & Co., famous for its role in profiting from the 2008 financial crisis, could profit even more from a downfall it helped engineer. Lehman Brothers, whose bankruptcy was caused by the collapse of the subprime mortgage market, is set to go to court to decide how to best repay its creditors. One of those creditors is John Paulson.

According to an article in the Wall Street Journal, Mr. Paulson’s Paulson & Co. bought about $7 billion in face value of Lehman Brothers debt, at an average cost of just 13 cents on the dollar. Another hedge fund, Owl Creek Asset Management, also bought a significant amount of Lehman Brothers debt after its collapse. Paulson & Co. could profit as much as $726 million, which would be a 78% return on its investment. Owl Creek stands to make up to $71.6 million.

John Paulson will go to court to push his plan for Lehman’s bankruptcy, looking to recover about 25 cents on the dollar. On his side are the California Public Employees’ Retirement System and San Mateo County.
For Detailed Investor Profiles on these Investors, click below:
CalPERS
Owl Creek Asset Management
Paulson & Co.
Related People: Andrew Hoine; Daniel Krueger; Jeffrey Altman; Jeffrey F. Lee; John Paulson; Mena Gerowin*; Mike Barr; Shai Tambor ; Sheru Chowdhry; Stuart Merzer
Related Entities: California Public Employees' Retirement System; CalPERS Equities; CalPERS Investments; Owl Creek I, LP; Owl Creek II, LP; Owl Creek Overseas Fund; Owl Creek Socially Responsible Investment Fund Ltd ; Paulson Advantage Master Ltd; Paulson Advantage Plus Master Ltd; Paulson Real Estate Recovery Fund; Paulson Recovery Fund; PCI
Related Article Tags: Shareholder Activists, Corporate Raiders and Proxy Battles


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