Buffett Watch

Fast Money Traders: John Paulson Replaces Warren Buffett As Most-Watched Investor


New York hedge fund manager John Paulson has replaced Warren Buffett as the nation's most influential investor, in the opinion of three of tonight's Fast Money traders.

Paulson & Co.'sinvestment moves have been getting increasingly intense attention after he correctly predicted the credit crisis and profitably bet against financial institutions.

This month, reports that he's buying multi-billion dollar stakes in Bank of America and Citigroup have sent those stocks higher, a sign of his growing influence on professional investors.

As the Fast Money Rapid Recap points out tonight, Paulson's personal wealth is substantial and growing quickly, but still just a fraction of Buffett's.  In this year's Forbes ranking of global billionaires, Paulson is number 76 with an estimated $6 billion.  He had a net worth of $300 million at the beginning of 2007.  Buffett is number two in the world with $37 billion.

Buffett's track record as a successful stock picker is also much longer, spanning many decades.  But his investments over the last year or so have focused more on high-yielding corporate debt rather than common stocks. 

It's too early to know if Paulson really will be seen as the "Warren Buffett of our lifetime," as Steve Grasso boldly puts it, but his star is shining very brightly right now on Wall Street.

Here's the conversation from tonight's Fast Money on CNBC:

MELISSA LEE:  Time for some whale watching.  Reports that John Paulson's buying shares of Citigroup sent the stock soaring more than 10 percent this week.  Could Paulson be replacing Warren Buffett as the most-watched big-time investor out there?  You're nodding your head furiously.

:  Absolutely he is.  Warren Buffett is a brilliant man, done a great job investing.  But Warren Buffett gets terms that none of the rest of us can get.  John Paulson's in there buying the exact same stocks, folks, that you and I can buy, at the exact same level.  So rather than getting a deal where I get a 10 percent dividend from Goldman Sachs and additional calls, you know, we'll call it converts on that trade,  Paulson's in here (reportedly) buying just Citi shares.  He was in there just buying Bank of America shares and so forth.  That's a completely different investor.  That's a lot more like you and me.

STEVE GRASSO:  Paulson.  This is who the mutual funds are watching.  This is who the hedge funds are watching.  This is the new 'Warren Buffett' of our lifetime.

JOE TERRANOVA:  And the one thing that he's doing right now that no one's talking about, he's buying gold.  Keep that in mind.  And gold is slowly rising.  He's got AngloGold, he's got Gold Fields .  So while we do talk about the Citi and the Bank of America and the Goldman Sachs, keep your eye on what he's doing and what he's thinking in terms of inflation. 

(We've also been hearing about the threat of long-term inflation from Buffett.)

MELISSA:  Do you ever, Guy, look at these guys and say that guy's buying that, so I'm in too.

GUY ADAMI:  I think it's cool that he's buying this stuff, but you don't know what he's selling on the other side of it, frankly.  He could have option positions against it, so you could be out of these positions entirely.  You have no idea.   So if you follow these guys, you do it at your - you basically do it with a grain of salt because there could be a lot of other things going on.

MELISSA:  We talked about that when all those 13Fs were coming out, that we do not know how they are hedging those positions.  So, buyer beware if you are going to follow these whales into these stocks.

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