The identity of the short wasn't relevant because it was "the famous John Paulson", it was relevant because it was the person in the room negotiating the refere

The identity of the short wasn't relevant because it was "the famous John Paulson", it was relevant because it was the person in the room negotiating the reference portfolio with them. They want to put together the best possible portfolio, yes, but don't forget they're getting paid to do this. They're going to put together the best portfolio that still brings in the check. And the ACA that ended up long was the parent company, "ACA Capital Holdings, Inc", not the management company, "ACA Management LLC", that worked with Paulson to put together the portfolio. I won't claim to know what the exact relationship between the two companies was, but the former didn't actually enter it's long position until 3 months after the latter signed off on the portfolio.