Billionaire John Paulson Bought Sprint Nextel Corporation (S), Sold Mylan Inc (MYL) In Q1 2013

Selling Delphi. Paulson was also selling Delphi Automotive PLC (NYSE:DLPH), and in this case it was a continuation from the last few months of 2012 when he had sold nearly half the shares he had owned at the beginning of October. The fund was left with 8.7 million shares at the beginning of April. Like Mylan Inc. (NASDAQ:MYL), Delphi hasn’t been doing too well in recent quarters and as a result the valuation is a bit high considering its trailing financial performance; like that company (as well as a number of Delphi’s peers in the auto space), the sell-side is expecting good numbers over the next several years. Specifically, the auto parts manufacturer is valued at 10 times forward earnings estimates and a five-year PEG ratio well below 1. We’d previously noted that Greenlight Capital, managed by billionaire David Einhorn, had also been selling shares of Delphi (check out Einhorn’s stock picks).

We’d stay away from Sprint Nextel Corporation (NYSE:S) for now, seeing where the stock is trading relative to the acquisition price; it seems a bit speculative to buy on the theory that DISH Network Corp (NASDAQ:DISH) and SoftBank will get into a bidding war here. Mylan Inc. (NASDAQ:MYL) and Delphi are similar in that they are dependent on delivering at least moderate earnings growth going forward to justify their current valuation, a reversal of recent business trends, and so we would avoid those stocks as well at least until earnings growth turned positive and looked to be sustainable for the next couple of years.

Disclosure: I own no shares of any stocks mentioned in this article.