John Paulson is currently one of the most followed money managers in the world. He founded Paulson & Co in 1994, and became well-known for his bets against subprime mortgages in 2007, which made him $3.5 billion. He made another $5 billion in 2010 by betting on gold. Though his Advantage Plus Fund did not perform well this year, it still returned around 19% annually since inception.
Paulson is graduated from Harvard. So is Eric Mindich. The founder of Eton Park Capital Management is a BA in Economics of Harvard. Before founding his own hedge fund in 2004, he spent 15 years at Goldman Sachs, leading the equities risk arbitrage business of Goldman as well as managing Goldman’s equities division. He is also the youngest partner ever in the history of Goldman Sachs: he became the partner in 1994 when he was only 27.
Both Paulson and Mindich are among the smartest investors in the world. We believe that by focusing on their stock picks, investors will be able to beat the market in the long term. Here we compiled a list of stocks both hedge fund managers are bullish about.
|MOTOROLA MOB WI||MMI||340020||83116|
|RALCORP HOLDINGS INC NEW||RAH||248097||61230|
|JPMORGAN CHASE & CO||JPM||172942||72649|
|MEDCO HEALTH SOLUTIONS INC||MHS||32823||148126|
Among the stocks listed above, the biggest position in Paulson’s portfolio is Citigroup Inc (C). At the end of September, Paulson & Co invested $661 million in C stocks and Eton Park also had $122 million worth of C. Since then, the stock returned 1.72%, lower than the 7.59% for SPY. Bill Ackman’s Pershing Square also had nearly $700 million invested in C shares at the end of September.
Another financial stock both Paulson and Mindich are bullish about is JPMorgan Chase & Co (JPM). As of September 30, Paulson & Co reported to own $173 million of JPM and Eton Part disclosed owning $73 million of JPM shares. The stock returned 5.53% since the end of the third quarter. Lee Ainslie is also bullish about JPM. His Maverick Capital had more than $200 million invested in JPM at the end of September.
News Corp (NWSA) is the largest position in Eton Park’s portfolio among the stocks on the list above. At the end of the third quarter, Eton Park had $400+ million invested in NWSA and Paulson & Co had $82 million worth of NWSA shares. Since the end of September, NWSA returned 10.72%, beating the market by more than 3 percentage points.
Over the third quarter, both Paulson and Mindich opened new position in Motorola Mobility Holdings (MMI). Paulson initiated a brand new $340 million worth of MMI and Mindich bought $83 million worth of MMI stocks. MMI returned 2.65% so far in the fourth quarter.
Other stocks both Paulson and Mindich are bullish about include Ralcopr Holdings Inc (RAH) and Medco Health Solutions Inc (MHS). Both stocks outperformed the market in the fourth quarter and generated double-digit returns. We like Mindich’s investment style. His merger sensibilities helped tripling the size of Eton Park in only seven years. We also like Paulson, who recently told his investors in an investor letter that he has adjusted his portfolio towards stocks with lower risk profiles and better prospects. We encourage investors to focus on the stocks both managers are in favor of and do in-depth research on these stocks for their own portfolio.