Below are billionaire John Paulson’s top 5 stock picks. For a comprehensive list see Billionaire John Paulson’s Top 10 Stock Picks.
5. BrightSphere Investment Group Inc. (NYSE: BSIG)
Billionaire John Paulson’s has benefited from its stake in BrightSphere Investment Group Inc. (NYSE: BISG). This is because the share price of BrightSphere rallied almost 110% in the last twelve months. The firm has initiated a position in the asset management holding company in 2018 and it accounted for 8.04% of the overall portfolio at the end of the September quarter
“Our investment performance remains generally stable though there are meaningful headwinds impacting our value-focused strategies in the current growth focused market.” “In our Alternatives segment, the $0.7 billion of net inflows in Q3‘20 reflect modest pickup in the pace of fundraising activity though we continue to expect pandemic driven delay in the timing of fundraises.” “We believe we continue to be on track to achieve our targeted annualized cost savings of over $20 million by Q1’21 in our corporate center through the implementation of an affiliate-led distribution approach.” “On the capital management front, in the third quarter we reduced the borrowings on our corporate revolver to $80 million from $130 million at the end of Q2’20, reducing our Net Debt / Adjusted EBITDA ratio to 1.5x as of the end of the third quarter compared to 1.7x at the end of the second quarter. Additionally, we fully paid off the remaining $22 million outstanding amount on our non-recourse seed facility,” Suren Rana, BrightSphere’s President and Chief Executive Officer said.
4. NovaGold Resources Inc. (NYSEMKT: NG)
Paulson & Co has been showing confidence in NovaGold since 2010 and it accounted for 8.24% of the portfolio at the end of the September quarter.
Although its shares rallied sharply during the first half of 2020, the decline in gold prices during the second half kept the NovaGold stock price under pressure. Its shares rose only 1% in the last twelve months compared to the double-digit growth in the broader market index. NovaGold Resources is engaged in the exploration and development of gold mineral properties in the United States.
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. The largest stake in NovaGold Resources Inc. (NYSE:NG) was held by Paulson & Co, which reported holding $264.3 million worth of stock at the end of September. It was followed by Sprott Asset Management with a $73 million position. Other investors bullish on the company included Kopernik Global Investors, Odey Asset Management Group, and JNE Partners. In terms of the portfolio weights assigned to each position JNE Partners allocated the biggest weight to NovaGold Resources Inc. (NYSE:NG), around 22.16% of its 13F portfolio.
3. SPDR Gold Trust ETF (NYSEARCA: GLD)
Billionaire John Paulson has also been holding a huge position in SPDR Gold Trust ETF (NYSEARCA: GLD) since 2009. It is the third-largest holding of Paulson’s fund, accounting for 10.46% of the overall portfolio. The price of SPDR Gold Trust ETF grew 16% in the last twelve months, extending the ten years gains to 28%. SPDR Gold Trust is an exchange-traded fund that invests in gold. Formed in 2004, it tracks the performance of the price of gold bullion. Here is what we said about GLD a couple of months ago:
Investors buy gold because they think its price in terms of US dollars will or could go up. It may go up a lot if printing trillions of dollars out of thin air to cover the budget deficits becomes the standard operating procedure of the Federal Reserve and the U.S. Treasury. Investors usually invest in gold as a hedge.
There were a total of 65 hedge funds with long GLD positions at the end of the third quarter. There are also other hedge fund managers who invest directly in physical gold, so the actual number of hedge funds that invest in gold is much higher. The total value of hedge funds’ GLD positions was nearly $3.5 billion. Ray Dalio has the largest position in GLD among all hedge funds tracked by Insider Monkey. Dalio’s GLD bet was worth $967 million.
2. Bausch Health Companies Inc. (NYSE: BHC)
Despite a stellar performance in the December quarter, shares of Bausch Health Companies Inc. (NYSE: BHC) fell 9% in the last twelve months. Paulson & Co has initiated a position in Bausch in fiscal 2014 and it currently represents the second largest stock holding of 13F portfolio.
Chou Associates Management has presented a compelling investment case for Bausch Health Companies in an investor’s letter. Here’s what Chou Associates Management stated:
“In early August, Bausch Health Companies Inc. announced that it is planning to spin off its eye care business, Bausch + Lomb, into an independent publicly traded company. This will allow the company to concentrate on its gastroenterology, aesthetics/dermatology, neurology and international pharma business.
Chairman and CEO Joseph Papa said, “We’ve looked at the value of our pure health companies like Alcon and Cooper and believe that Bausch + Lomb would compare very favorably when investors have an opportunity to make a judgment about the relative value of the stand-alone business”.
Comparables like Cooper Companies and Alcon Inc. are currently trading between 18 and 20 times EBITDA. If Bausch + Lomb trades at similar multiples as a stand-alone company, the total value of Bausch Health using sum-of-the-parts method, net of debt, should be worth north of $35 per share, as an inference. For a long time we have felt that Bausch was undervalued, but the investors were not giving credit that management has done a good job in running the operations, selling non-core assets, as well as de-leveraging its balance sheet. They felt the process was too slow, we hope the spin-off of Bausch + Lomb unit will be the catalyst that is needed for investors to price the company closer to its intrinsic value.”
1. Horizon Therapeutics (NASDAQ: HZNP)
Paulson & Co’s position in Horizon Therapeutics Public Limited Company (NASDAQ: HZNP) helped in trimming losses from other investments. Shares of Horizon Therapeutics rose more than 108% in the last twelve months, extending the five years gains to above 300%. Horizon Therapeutics is the largest stock holding of Paulson’s portfolio. Horizon Therapeutics is a biopharmaceutical company with a major focus on researching, developing, and commercializing medicines for the treatment of rare and rheumatic diseases in the United States and internationally.
Please also see 10 Best Mid-Cap Stocks To Buy According To Billionaire Brian Higgins and Billionaire Louis Bacon Shuns Bitcoin, Returns 70% By Betting On These Stocks
