How Much Did John Paulson Lose in Sino-Forest?

There are reports circulating that estimate John Paulson’s loss in Sino-Forest at more than C$700 Million. We decided to calculate our own estimate using public reports and Paulson’s statements.

On October 30th, 2010 John Paulson reported a 34,714,300 position in Sino-Forest. (Here is the link for the filing). This position corresponded to 14.1% of Sino-Forest’s outstanding shares. Sino-Forest closed at C$20.16 at the end of October. The stock increased to C$23.29 by the end of the year. So Paulson made some money on Sino-Forest. He would eventually lose all of that and more.

best gold ETF

Canada requires Paulson to report his holdings under the following circumstances:

(c) within 10 days after the end of the month in which the security holding percentage of the eligible institutional investor in a class of voting or equity securities of the reporting issuer, as at the end of the month, increased or decreased past thresholds that are products of whole numbers multiplied by 2.5 percent of the outstanding securities of the class and that are in excess of 10 percent of the outstanding securities of the class; and

(d) within 10 days after the end of the month in which the security holding percentage of the eligible institutional investor in a class of voting or equity securities of the reporting issuer, as at the end of the month, decreased to less than 10 percent.

So Paulson had to report within 10 days after the end of the month if his holdings fell below 12.5% or 10%. Given that Paulson didn’t file anything until yesterday, (we assume he follows Canadian law) we take that he didn’t cross these thresholds in April or May. So, we will assume that Paulson had at least 12.5% of Sino-Forest at the end of May. We have no reason to believe than Paulson added any shares during the past 6 months (he has been reducing his holdings in the company since at least April 2010).

We know that John Paulson could have waited till the end of June (plus 10 days) to submit his filing (Here is the pdf of the filing). He didn’t. This tells us that he finished selling his entire stake by June 17th. During the previous 10 days, the average daily trading volume of Sino-Forest was close to 20 Million shares, so it’s reasonable to assume that Paulson sold his stake in the open market.

Assuming that Paulson executed his trades at the trade weighted average price of Sino-Forest between June 3rd and June 17th, he would have sold his 34.7 Million shares for C$145.5 Million.  These shares were valued at C$808.5 Million at the beginning of 2011. So, Paulson’s 2011 loss in Sino-Forest were probably at most C$663 Million.

If we assume that Paulson sold 3.94 Million shares at the beginning of 2011 without making or losing anything (so his share in Sino-Forest is slightly more than 12.5%), his loss would decrease to C$588 Million.

Overall, it’s safe to say that Paulson lost around C$600-C$650 Million in Sino-Forest.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!