Three of John Paulson's Largest Portfolio Additions
John Paulson, president and founder of hedge fund Johnson & Co., became famous for short-selling subprime mortgages in 2007.
In an interview with the Wall Street Journal, Paulson stated, “The flexibility of having long and short exposure across the capital structure allows us to optimize performance across market cycles. Our goals are capital preservation, above average returns over the long term, and low correlation to the markets.”
Below are three of John Paulson's largest portfolio additions, as of March 31.
Caesars Entertainment (NASDAQ: CZR): At the Ira Sohn Investment Conference, John Paulson spoke highly of Caesars Entertainment, a casino entertainment services provider. On February 8, Caesars Entertainment went public at a price of $9.
As of March 31, Paulson & Co. had 12,372,835 shares in Caesars Entertainment, which made up about 1.2% of the hedge fund's portfolio. Since Paulson spoke about the stock at the Iran Sohn Investment Conference in May, shares are down more than 12%.
Covidien (NYSE: COV): Covidien produces, develops, and sells healthcare products in the United States. In the last quarter, Paulson & Co purchased 1,800,000 shares of the company.
In Coviden's second-quarter 2012, the company saw sales increase 5.2% year-over-year. In addition, the company saw second-quarter operating income increase to $1.245 billion, compared to $1.164 billion in second-quarter 2011.
The Supreme Court is expected to make a decision on Obamacare this week. Covidien could be affected by this decision. If passed, the medical devices tax could have a significant impact on the company's operation results and cash flows. In its most recent 10-Q filing, the company stated, “U.S. net sales of potentially taxable medical devices represented approximately 30% to 40% of our total net sales in fiscal 2011.”
AboveNet (NYSE: ABVT): In the last quarter, John Paulson bought 1,000,000 shares of AboveNet, at a value of $82,800,000. Paulson & Company's stake comprised approximately 3.81% of AboveNet's outstanding shares. AboveNet provides high-bandwidth connectivity solutions to corporate, carriers, and governments in the US and Europe.
In first-quarter 2012, AboveNet's revenue was $127.7 million, compared to $114.4 million in first-quarter 2011. Also, on March 18, AboveNet entered into an Agreement and Plan of Merger with Zayo Group. In the agreement, Zayo group will acquire AboveNet for $2.2 billion. The companies expect to close the deal by mid 2012.
Since Paulson reported his holdings of AboveNet on March 31, the company's shares have increased about 1.4%. Year-to-date, AboveNet is trading up about 29.1%.
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