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21 hours ago · 2 min read ·
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on Jun 10, 2017

Portfolio manager Sheru Chowdhry is expected to leave Paulson & Co, two sources said on Friday, signaling a quickening pace of departures at the hedge fund as its assets have shrunk and some of its portfolios have suffered losses.

Executives T. Michael Johnson, Natalie Oelkers and Claudio Macchetto have also left or are expected to soon leave the New York City-based firm run by billionaire investor John Paulson, the sources said.

A spokesman for Paulson declined to comment. Efforts to reach the executives through email and LinkedIn were not successful.

The moves come as the firm's assets have steadily dwindled over the last few years, shrinking to roughly $10 billion now from $36 billion at its peak in 2011. Losses in its funds as well as investor redemptions have contributed to the decline.

Chowdhry co-manages the Paulson Credit Opportunities fund with Ty Wallach and is a partner at the firm. Paulson told clients in a 2015 letter that he had promoted both men. Chowdhry, who joined the firm in 2004, shared trading authority with Paulson himself.

The others were all managing directors at the firm and had been working for Paulson for a number of years.

Macchetto, the head of platform distribution, joined in 2007 with Johnson, head of U.S. institutional sales, coming a year later in 2008. Oelkers worked in marketing and investor relations and arrived in 2009. She began working at Owl Rock in June, according to her LinkedIn profile.

A decade ago, Paulson & Co was one of Wall Street's largest and hottest hedge funds after the firm earned $15 billion in 2007 with a bet against the overheated housing market.

Paulson, who had founded the firm in 1994, became an industry celebrity as investors ranging from state pension funds to wealthy individuals eagerly invested with him. Assets swelled to $36 billion by 2011. At its peak, Paulson had 10 people on its marketing team; now there are four people, a source familiar with the fund said.

But the firm's record of strong gains gave way to more mixed returns in recent years as soured bets on companies like Valeant Pharmaceuticals International Inc led to losses in some funds. Last year the firm's Paulson Partners Enhanced merger arbitrage fund tumbled 50 percent before falling further in early 2017.

Some banks' wealth management platforms, including UBS Group AG and Bank of America Corp, distanced themselves from Paulson in 2015 amid worries that his fund's returns had simply become too volatile.

While the firm still oversees $10 billion, only about $2.5 billion belong to outside investors with Paulson personally owning the bulk of the rest of the assets, a person familiar with the firm said.

In recent years, investors like pension funds have become far less patient with hedge funds, protested their hefty fees and string of lackluster returns by pulling money out at the first sign of trouble. In 2016, more hedge funds shut down than at any time since the financial crisis.

And as Paulson & Co's profile dimmed, a number of prominent employees began leaving. Last year Samantha Greenberg, a former partner, left to set up her own firm. Later in 2016, Sihan Shu, also left to launch his own firm. Putnam Coes, a partner who had been chief operating officer also left. John Reade, a precious metals strategist, left the firm in November.

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