Hedge Fund Heavyweight Paulson Makes New Housing Bet
Hedge fund manager John Paulson is underscoring his bullish bet on America in a big way.
The billionaire investor, who famously made more than $4 billion betting against the US subprime housing market at its peak in 2007, will be throwing his hat into the race to acquire residential land—and dirt cheap.
Paulson, who manages the $31 billion Paulson & Co. fund, has made a "stalking horse" bid of $42.4 million to acquire the assets of Engle Homes, which includes land and lots in Arizona targeted for more than 8,000 homes, and nine completed residences.
Engle-owned property in Colorado and Nevada is also part of Paulson's proposed deal. Engle is a subsidiary of Technical Olympic USA of Hollywood, Fla. .
The offer follows auctions earlier this year by TOUSA where Paulson also participated, according to Reuters and sources familiar with the matter.
Paulson runs the $31 billion hedge fund Paulson & Co.
With builders suffering due to continued sluggish sales of new homes, slow job growth, and the competition for market share, it really is survival of the fittest—talks of consolidation among the biggest players have been circulating in the industry and among investors.
According to Citigroup analyst Josh Levin, in a note issued to clients Wednesday, "We view consolidation as the proverbial elephant in the room. Management teams are not discussing the issue publicly, but we would be surprised if at least some of them were not talking about it privately.
Investors like Paulson see this as an opportunity to strike while the iron is hot. Buying land makes sense because they recognize the demand from builders who could benefit from increased supply and lower prices.