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Billionaire John Paulson’s Favorite Healthcare Stocks Include The Latest Industry Punching Bag, Mylan

John Paulson is an American hedge fund manager and billionaire who founded his investment firm Paulson & Co in 1994 with only $2 million and one employee. By 2003, the fund’s assets had grown to $300 million. In 2006, Mr. Paulson started the famous ‘Credit Opportunities Fund’, which mainly bet against subprime mortgages. John Paulson made around $4 billion and cemented his status in the investment world through those bets. In 2010, he achieved another milestone by personally making $5 billion. However, Paulson & Co’s later bets on gold and the Euro cost the fund dearly, and its assets fell to $19.3 billion as of March 31, 2015, from $38 billion in 2011.

According to its latest 13F filing, Paulson & Co manages a U.S. equity portfolio containing positions valued at $9.84 billion, and greater than half of that amount is dedicated to stocks from the healthcare sector. In this article, we’ll analyze Paulson & Co’s biggest healthcare stock-related moves in the second quarter.

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Mallinckrodt PLC (NYSE:MNK)

– Shares Owned by Paulson & Co (as of June 30): 8.38 million

– Value of Paulson & Co’s Holding (as of June 30): $508.79 million

Paulson & Co decreased its position in Mallinckrodt PLC (NYSE:MNK) by 6% during the second quarter, selling 578,300 shares of the company and ending the quarter with a stake valued at $508.79 million. On Wednesday, Mallinckrodt announced that it has agreed to sell its nuclear-imaging business to IBA Molecular for roughly $690 million before tax impacts, out of which $574 million will be paid as an upfront payment. Mallinckrodt CEO Mark Trudeau said that the deal shows the company’s increasing focus on the high-growth specialty pharmaceutical sector. Mallinckrodt PLC (NYSE:MNK)’s stock is up by over 6% so far this year.

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Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)

– Shares Owned by Paulson & Co (as of June 30): 16.77 million

– Value of Paulson & Co’s Holding (as of June 30): $842.55 million

Paulson & Co sold 3.83 million shares of Israel-based pharmaceutical company Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) during the three-month period ended June 30, ending the quarter with an $842.55 million stake in the company. Teva’s shares have been falling ever since the U.S. Patent Office invalidated its two patents for Copaxone 40 mg, a multiple sclerosis drug that accounts for 20% of the company’s revenue. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) earned $1.25 per share on $5 billion in revenue for the second quarter, ahead of the Street’s forecasts of $1.20 in EPS on $4.87 billion in revenue. The company expects to earn between $5.20 and $5.40 per share for the full year. Andreas Halvorsen’s Viking Global owns 27.74 million shares of Teva as of June 30.

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On the next page we’ll discuss some more healthcare stock picks made by John Paulson in the second quarter.

Allergan plc Ordinary Shares (NYSE:AGN)

– Shares Owned by Paulson & Co (as of June 30): 3.95 million

– Value of Paulson & Co’s Holding (as of June 30): $912.45 million

Paulson & Co unloaded 27% of its stake in Allergan plc Ordinary Shares (NYSE:AGN) during the second quarter, selling about 1.47 million shares of the company. Allergan reported second quarter EPS of $3.35 on $3.68 billion in revenue, beneath the Street’s consensus estimates of $3.34 for EPS and $4.1 billion for revenue. Earlier this month, Allergan announced its plan to acquire ForSight Vision5, a privately-held biotech firm for which it will pay $95 million up front plus a milestone payment next year if ForSight’s innovative glaucoma treatment device receives FDA approval. Of the 749 funds in our database that filed a 13F for the June 30 reporting period, 131 were long Allergan plc Ordinary Shares (NYSE:AGN), notably down from 170 funds a quarter earlier. Activist investor Carl Icahn bought 3.4 million shares of Allergan in the second quarter.

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– Shares Owned by Paulson & Co (as of June 30): 22.03 million

– Value of Paulson & Co’s Holding (as of June 30): $952.49 million

Mr. Paulson and his team sold 1.31 million shares of Pennsylvania-based pharmaceutical company Mylan NV (NASDAQ:MYL) in the June quarter, ending the quarter with $952.49 million worth of its stock. That stock took it on the chin this week as Mylan has been facing intense criticism related to the 400% hike in the price of its anti-allergy auto-injector EpiPen. The American Medical Association has urged Mylan to take back the “exorbitant” price hike, while the company is being grilled in the political realm as well. Democratic nominee Hillary Clinton has called the price increase “outrageous” and Senator Amy Klobuchar, a ranking member of the Antitrust Subcommittee of the Senate Judiciary Committee, is calling for a judiciary committee and Federal Trade Commission investigation of the rate increase. Mylan NV (NASDAQ:MYL) shares have lost 25% of their value this past week.

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– Shares Owned by Paulson & Co (as of June 30): 5.19 million

– Value of Paulson & Co’s Holding (as of June 30): $956.22 million

Paulson & Co cut its stake in Shire PLC (ADR) (NASDAQ:SHPG) by 26% during the second quarter, selling around 5.19 million shares of the company and ending the quarter with a position worth $956.22 million, which accounts for 9.7% of the value of the hedge fund’s equity portfolio. JPMorgan Chase & Co. reiterated its ‘Overweight’ rating for the Ireland-based biotech company in a report released on Tuesday. Last week, several reports suggested that Shire was in talks to acquire Raptor Pharmaceutical Corp. (NASDAQ:RPTP) for $800 million. Shire’s stock is down by over 2% so far this year. Andreas Halvorsen’s Viking Global owns over 1.16 million shares of Shire PLC (ADR) (NASDAQ:SHPG) as of June 30.

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Disclosure: None