recommendations to his boss.
“Just tell me what you think!” Paulson screamed at Chu, who eventually left the firm.
Sometimes Paulson hinted at what might have been aggravating him, noting that competitors and friends seemed to be pulling away. He told one analyst that an old roommate from Harvard, Manuel Asensio, was making a million dollars a year at his hedge fund shorting tiny stocks, “and we’re killing ourselves here.”
The fund lost 4 percent in 1998, enough to spur some clients to rush for the exits, leaving Paulson & Co. with about $50 million at the end of the year—down from more than $100 million at the end of 1997. Some deserted Paulson for larger merger specialists, some of whom managed to make a bit of money during the year.
“I was not a major player,” Paulson acknowledges. “We were a little shell-shocked from the LTCM collapse so we were less aggressive getting back into the market later in the year like others.”
On days the firm made money, Paulson was friendlier, even charming,a change in personality that both relieved and confused his employees. Some of them attributed his mercurial personality to his drive to be a major player. It was also, they realized, the nature of merger investing, which requires split-second decisions based on imperfect information. Others learned to appreciate Paulson’s brutal honesty, such as when he dissected their investment recommendations, looking for holes.
While the market shakeout of 1998 cost Paulson clients, it also left him with ripe investment opportunities, enabling him to score impressive gains over the next few years. Just as important, he made a dramatic decision to alter his lifestyle. Paulson had continued to host blowout bashes at his SoHo loft in his early days of running the fund. But as he approached his mid-forties, almost everyone in his group of friends had married, and he, too, was beginning to tire of the social scene. Paulson took out a pad and pen and wrote down the characteristics he was looking for in a wife. The word “cheerful” topped the list. Paulson sensed he needed a partner who could help him deal with the ups and downs of his life.
“I figured I’d always make money, so that was unimportant to me,” Paulson says.
He quickly realized there was a woman he was attracted to who fit the bill and was sitting nearby: his assistant, Jenny.
“Jenny didn’t drink, smoke, or go out late at night; for me she was a breath of fresh air,” Paulson says. “She was almost always smiling and cheerful.”
Paulson quietly pursued Zaharia, asking her out almost every other week for more than a year, but she wouldn’t agree to go on a date. Zaharia told Paulson that she’d only date him if he fired her and found her a new job. But Paulson couldn’t bear to let Zaharia go and work for someone else. He offered her all kinds of enticements, including trips to Aspen, Miami, and Los Angeles. Zaharia had never been to those cities and was tempted to go with her boss, but ultimately refused, saying she didn’t want to cross the lines of professional behavior.
Zaharia did agree to have lunch with Paulson, however, and the two began getting together at least once a week, though other employees were in the dark about the budding relationship. After more than twohundred meals together, and an occasional Rollerblading outing in Central Park, Paulson realized he was in love and proposed; six months later they wed. When Paulson finally told his employees, they were floored, having completely missed any signs that an office romance had been brewing.
Paulson went out of his way to embrace Jenny and her family. The couple agreed to wed in an Episcopal church in Southampton, and Paulson became friendly with the priest. Light streamed through the seaside church’s Tiffany windows as the sun set and the ceremony began.
By 2001, Paulson was on more solid footing in his personal life. And his fund had grown as well. He managed over $200
“Just tell me what you think!” Paulson screamed at Chu, who eventually left the firm.
Sometimes Paulson hinted at what might have been aggravating him, noting that competitors and friends seemed to be pulling away. He told one analyst that an old roommate from Harvard, Manuel Asensio, was making a million dollars a year at his hedge fund shorting tiny stocks, “and we’re killing ourselves here.”
The fund lost 4 percent in 1998, enough to spur some clients to rush for the exits, leaving Paulson & Co. with about $50 million at the end of the year—down from more than $100 million at the end of 1997. Some deserted Paulson for larger merger specialists, some of whom managed to make a bit of money during the year.
“I was not a major player,” Paulson acknowledges. “We were a little shell-shocked from the LTCM collapse so we were less aggressive getting back into the market later in the year like others.”
On days the firm made money, Paulson was friendlier, even charming,a change in personality that both relieved and confused his employees. Some of them attributed his mercurial personality to his drive to be a major player. It was also, they realized, the nature of merger investing, which requires split-second decisions based on imperfect information. Others learned to appreciate Paulson’s brutal honesty, such as when he dissected their investment recommendations, looking for holes.
While the market shakeout of 1998 cost Paulson clients, it also left him with ripe investment opportunities, enabling him to score impressive gains over the next few years. Just as important, he made a dramatic decision to alter his lifestyle. Paulson had continued to host blowout bashes at his SoHo loft in his early days of running the fund. But as he approached his mid-forties, almost everyone in his group of friends had married, and he, too, was beginning to tire of the social scene. Paulson took out a pad and pen and wrote down the characteristics he was looking for in a wife. The word “cheerful” topped the list. Paulson sensed he needed a partner who could help him deal with the ups and downs of his life.
“I figured I’d always make money, so that was unimportant to me,” Paulson says.
He quickly realized there was a woman he was attracted to who fit the bill and was sitting nearby: his assistant, Jenny.
“Jenny didn’t drink, smoke, or go out late at night; for me she was a breath of fresh air,” Paulson says. “She was almost always smiling and cheerful.”
Paulson quietly pursued Zaharia, asking her out almost every other week for more than a year, but she wouldn’t agree to go on a date. Zaharia told Paulson that she’d only date him if he fired her and found her a new job. But Paulson couldn’t bear to let Zaharia go and work for someone else. He offered her all kinds of enticements, including trips to Aspen, Miami, and Los Angeles. Zaharia had never been to those cities and was tempted to go with her boss, but ultimately refused, saying she didn’t want to cross the lines of professional behavior.
Zaharia did agree to have lunch with Paulson, however, and the two began getting together at least once a week, though other employees were in the dark about the budding relationship. After more than twohundred meals together, and an occasional Rollerblading outing in Central Park, Paulson realized he was in love and proposed; six months later they wed. When Paulson finally told his employees, they were floored, having completely missed any signs that an office romance had been brewing.
Paulson went out of his way to embrace Jenny and her family. The couple agreed to wed in an Episcopal church in Southampton, and Paulson became friendly with the priest. Light streamed through the seaside church’s Tiffany windows as the sun set and the ceremony began.
By 2001, Paulson was on more solid footing in his personal life. And his fund had grown as well. He managed over $200
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