These Were Billionaire John Paulson’s Biggest Moves in Q4

Time Warner Cable Inc (NYSE:TWC)

 – Shares Owned by Paulson & Co. (as of December 31): 5.87 million

 – Value of Holding (as of December 31): $1.09 billion

Moving on, Time Warner Cable Inc (NYSE:TWC) was another company in which Paulson & Co. reduced its stake substantially during the fourth quarter, by 27%. Considering that Time Warner Cable Inc (NYSE:TWC) is among the few large-cap companies that is trading in the green so far this year, it might seem that the fund didn’t make the right move in doing so. However, one must also take into account that the $55 billion Time Warner Cable/Charter Communications Inc. (NASDAQ:CHTR) deal is facing intense scrutiny from regulators and there is still a chance that it won’t be approved, hence the fund might have reduced its stake just to safeguard itself in case the deal fails to materialize. On January 30, analysts at RBC Capital reiterated their ‘Sector Perform’ rating on Time Warner Cable’s stock, but reduced their price target on it to $190 from $204. Thomas Steyer‘s Farallon Capital reduced its stake in the company by 2% to 3.3 million shares during the fourth quarter.

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Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

 – Shares Owned by Paulson & Co. (as of December 31): 13.26 million

 – Value of Holding (as of December 31): $1.35 billion

Shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) have fallen off a cliff since August, losing over 60% of their value since then. However, Paulson & Co. displayed its conviction on the stock during the fourth quarter, when the stock fell by over 43%, increasing its stake in the company by 49%. The fall in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has been so excruciating for Mr. Paulson’s peer Bill Ackman released an apology letter to Pershing Square’s investors in January stating,

“When the stock price rose this summer to the mid-$200s per share, we did not sell as we believed it was probable the company would likely complete additional transactions that would meaningfully increase intrinsic value. In retrospect, this was a very costly mistake.”

Valeant Pharmaceuticals is slated to report its fourth quarter numbers next week and analysts’ estimate that it will report EPS of $2.60 on revenue of $2.76 billion. For the same quarter of the previous year, the company reported EPS of $2.58 on revenue of $2.28 billion. According to a recent regulatory filing by Pershing Square, it has again increased its stake in Valeant Pharmaceuticals and owns 30.71 million shares of the company as of February 5.

Allergan plc Ordinary Shares (NYSE:AGN)

 – Shares Owned by Paulson & Co. (as of December 31): 5.53 million

 – Value of Holding (as of December 31): $1.73 billion

Despite Paulson & Co. reducing its stake in Allergan plc Ordinary Shares (NYSE:AGN) by 22% during the fourth quarter, the company still remained the fund’s largest equity holding at the end of December. Shares of the company have lost over 13% of their value since Pfizer Inc. (NYSE:PFE) announced on November 24 that it would be acquiring the company for $160 billion. Since this deal has also come under intense scrutiny from regulators and has been facing a lot of flak from lawmakers, it seems Paulson & Co. is trying to cut its risk by reducing its stake in the company. However, unlike with Time Warner Cable Inc, it seems the fund made the right call by reducing its stake in Allergan plc Ordinary Shares (NYSE:AGN), as shares are down by 11% year-to-date. On February 4, Allergan reported its fourth quarter financial numbers, declaring EPS of $3.48 on revenue of $4.10 billion topping analysts’ consensus estimate of $3.18 in EPS, but widely missing on revenue estimates of $5.71 billion.

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Disclosure: None