Odyssey investment refers to the investment activities conducted by Odyssey Partners, which was once a legendary investment firm on Wall Street. Founded in 1982 by legendary investors Leon Levy and Jack Nash, Odyssey Partners quickly grew to manage billions of dollars in capital and delivered outstanding returns for its investors through leveraged buyouts and event-driven investing. At its peak in the late 1990s, Odyssey was considered one of the top private equity firms and took part in many high-profile deals. However, after the dot-com crash, Odyssey struggled and eventually closed down. But its legacy on Wall Street remains, with alumni like John Paulson going on to find huge success. The rise and fall of Odyssey reflects both the opportunities and risks associated with alternative investing strategies.
Odyssey Partners took wall street by storm in the 1980s leveraged buyout boom
Odyssey Partners was founded in 1982 by Leon Levy and Jack Nash, two legends on Wall Street who sought to take advantage of the 1980s leveraged buyout boom. They raised $400 million for Odyssey I, their first fund, in just 10 days based on their strong reputations. Odyssey perfected the art of taking over undervalued companies using debt financing, improving operations, then selling for a big profit. This allowed Odyssey to produce huge returns like a 5X return from the buyout of auto parts maker TRW. At its peak, Odyssey managed over $5 billion in capital and was considered among the top leveraged buyout firms alongside KKR and Forstmann Little.
John Paulson got his start at Odyssey Partners before founding his own legendary hedge fund
One of Odyssey’s early employees was a young John Paulson. Joining straight out of Harvard Business School in 1984, Paulson spent two formative years at Odyssey and credits it for shaping his investing approach based on financial analysis. After leaving Odyssey, Paulson worked at Bear Stearns before founding his own hedge fund in 1994, Paulson & Co. Paulson & Co. would make billions shorting subprime mortgages leading up to the 2008 Financial Crisis and at one point managed over $38 billion in assets.
The dot-com crash spelled the end for Odyssey Partners
Odyssey struggled to adapt its leveraged buyout strategy for the new technological landscape of the late 1990s. It suffered big losses on investments made at the height of the dot-com bubble like Concentric Network, a web hosting company. Odyssey was also damaged by the departure of talent like Paulson. The firm failed to effectively reinvent itself and ultimately closed its doors in 2001 after assets under management dwindled to $600 million.
Odyssey Partners was once an investment legend on Wall Street before struggling to adapt and eventually shutting down. But its legacy lives on through alumni like John Paulson who took its investing principles to achieve even greater success.