A hedge fund billionaire who was an economic adviser to US president-elect Donald Trump during the campaign has taken a position in a fast-growing Chinese ride-sharing company that recently signed a deal to acquire Uber Technologies Inc’s operations in China.
John Paulson, who made US$15 billion betting against the housing market before the financial crisis, told his investors on Wednesday that at least one of his portfolios had taken an investment stake in Didi Chuxing (滴滴出行), a privately owned Chinese company, said people briefed on the matter who were not authorized to speak publicly.
The investment, by Paulson’s Advantage funds, is about 7 percent of the assets of those portfolios, he told investors, the people said.
Didi Chuxing, which has backing from Alibaba Group Holding Ltd (阿里巴巴) and Apple Inc, could prepare for an initial public offering in the next year, according to news reports.
In August, Didi struck a deal with its main rival, US ride-hailing giant Uber, to acquire Uber China in a transaction that created a company some valued at US$35 billion.
Paulson disclosed the investment in Didi at a meeting with investors on Wednesday in New York City during which he apologized for the overall poor performance of his US$1.2 billion Advantage funds.
His Paulson Advantage fund is down about 22 percent this year, and a leveraged version called Paulson Advantage Plus is down about 26 percent.
In making the investment, Paulson is joining several prominent hedge funds and investment firms including two Tiger Cubs — a nickname for firms founded by proteges of hedge fund manager Julian Robertson and his Tiger Management.
One of those firms, Coatue Management, founded by Philippe Laffont, made a US$2 billion investment in July last year, according to the private equity data site CrunchBase.
Chase Coleman’s Tiger Global has also backed the Chinese company, as has Daniel Loeb’s Third Point.
While Didi has been an alluring investment because of the size of the Chinese market and the company’s ability to knock out the competition by buying its two biggest local competitors — Uber’s China unit and Kuaidi Dache (快的打車) — it could take years for the company to make money.
This could make it difficult for Paulson as he faces losses at his firm and investors demand their money back.
Didi faces challenges, too. In September, Chinese authorities said they were investigating antitrust concerns with Uber’s planned sale of its Chinese operations to Didi.
In recent years, Paulson has struggled to regain the magic that made him one of the most envied hedge fund managers on Wall Street.
He got rich betting on the collapse of the subprime housing market by shorting some of the bonds backed by mortgages issued to consumers with checkered credit histories.
This success — which gave him and his investors a US$15 billion payday — helped him attract investment from a wide array of investors.
In a financial disclosure form last year, Trump reported being an investor in three of Paulson’s funds, including Advantage Plus. It is not known if he is still an investor.
Trump in August named Paulson as one of his economic advisers. Paulson was one of the first people on Wall Street to lend support to Trump’s presidential campaign. In May, he hosted a fundraiser at Le Cirque in Manhattan where tickets for hosts were US$250,000 a couple.
However, years of poor performance and investor redemptions have taken a toll on his Paulson & Co hedge fund firm. Total assets under management have plunged to about US$12 billion from US$36 billion in 2011.
One of the firm’s big losing bets this year is Valeant Pharmaceuticals Inc. Its stock has fallen to US$18 a share this year from about US$100.
Paulson has had a mixed record investing in China.
His firm invested in Alibaba, the giant search engine company, before its public offering and made money on it, but he stumbled in 2011 on a stake in Sino Forest Corp (嘉漢林業), a forestry company that lost most of its value after Carson Block, a short seller, issued a highly critical report that questioned its accounting practices.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS