Billionaire John Paulson, famed for making a whopping $15 billion by betting against subprime mortgages in 2007, founded hedge fund firm Paulson & Co. in 1994 with only $2 million. The investment firm currently manages approximately $19.3 billion, after having peaked in 2011, when the firm was managing as much as $38 billion. Mr. Paulson, who earned a degree at Harvard Business School, has been on a rough ride in recent years, as his firm’s disappointing performance has forced him to put up his own capital to back a line of credit of his firm. The multi-billion-dollar hedge fund specializes in event-driven arbitrage strategies such as merger arbitrage, bankruptcy reorganizations and distressed credit, structured credit, recapitalizations, restructurings, and other corporate events. According to data compiled by Insider Monkey, Paulson & Co.’s 56 long positions in companies with a market capitalization above $1 billion posted a weighted average loss of 13.1% in the first quarter of 2016, based on the size of those positions on December 31. “The most important thing in investing though is to be true to your compass”, said the billionaire investor in a fresh interview after being awarded the 2016 Leadership Dinner Business Statesman Award by the Harvard Business School. Mr. Paulson also said that “[…] you have to have a strategy in a position and stay true to that strategy and not pay attention to noise that could surround any particular investment”. With that in mind, let’s take an in-depth look at Paulson & Co.’s largest holdings as of the end of 2015 and examine their performance in the first quarter of the current year.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 Mylan NV (NASDAQ:MYL)
– Shares Owned by Paulson & Co. (As of December 31): 22.79 Million
– Value of Paulson’s Holding (as of December 31): $1.23 Billion
– Q1 Return: -14.3%
Paulson & Co. increased its exposure to Mylan NV (NASDAQ:MYL) by 881,000 shares or 4% during the December quarter, ending 2015 with 22.79 million shares valued at $1.23 billion. Mylan is a global pharmaceutical company that develops, manufactures and markets generic, branded generic and specialty pharmaceuticals. The shares of the Netherlands-domiciled company have declined 22% in the past 12 months, partly because of allegations of price gouging around embattled Valeant Pharmaceuticals. Several news outlets recently pointed out that the price of Mylan’s EpiPen Auto-Injector, which is used for the treatment of severe allergic reactions, was lifted from roughly $76 per package in 2001 to more than $500. Moreover, Mylan has pursued numerous acquisitions in the past decade or so, which might provide yet another resemblance with Valeant. In mid-February, Mylan issued a public offer to the shareholders of Swedish-based Meda AB to acquire all shares of Meda for approximately $7.2 billion. Meda AB is an international specialty pharma company that has a wide portfolio of branded, over-the-counter and generic drugs sold in more than 150 countries. The aforementioned offer is anticipated to close by the end of the third quarter of this year. The hedge fund sentiment towards Mylan declined in the fourth quarter of 2015, with the number of funds invested in the company dropping to 60 from 74 quarter-on-quarter. Scott Ferguson’s Sachem Head Capital Management LP acquired a new stake of 3.35 million shares in Mylan NV (NASDAQ:MYL) during the October-to-December period.