We took a look at John Paulson’s portfolio to see if we liked any of his picks. As of December 31, 2010, Paulson had positions in all of the companies below. In total Paulson had 102 total positions for his fund John Paulson and Co. Here are the names that caught our eye, plus some commentary on each.
Suntrust (STI): Suntrust investors still took a drubbing during the 2008 crisis as the bank was forced to accept TARP relief, but the company has a promising road ahead of it. In its home market of Atlanta, many area banks are suffering, with Suntrust the first player to capitalize on competitors' woes. CEO James Wells became chief executive a year before the crisis hit which spurred a cost-saving initiative at the coaxing of investors looking for higher growth. The move was well-timed, as the company picked up hundreds of millions in savings to help buffer its finances during the ensuing fall-out. Population growth in the south should remain a tailwind for Suntrust, and net write-offs should continue to drop. We value the company at $36 per share using a 10.5% cost of equity.
Medtronic (MDT): Medtronic company produces medical equipment and holds market leading positions in heart devices, insulin pumps, and spinal products. Known once for its leaning too much on its heart disease business, the company has moved into other therapeutic areas, a good move in our opinion. Shares have appreciated over the past three months since we first wrote about the company here and again where we declared it one of our 10 dividend "kings" here. Medtronic trades on a TTM price to earnings ratio of 13.68. Shares trade hands at $37.83, and yield 2.36% at the time of writing.
TransOcean (RIG): Also a George Soros favorite, TransOcean made $9.57 billion in revenues in 2010, which was a decrease of 17.13%, after falling another 8.82% in 2009. The EBT margin shrunk to 13.57% in 2010, but was 33.96% in 2009. EPS fell by 69.61% to $2.99, which implies a P/E of 28.4.
The company made revenues of $9.57 billion in 2010, which was a decrease of 20.6%, after falling 8.8% in 2009. The EBT margins in 2010 and 2009 were 13.5% and 33.96%. The 30-day put/call ratio is 0.7.
The company is led by Steven L. Newman, who is the president and CEO. Before beginning his current position in March 2010, Mr. Newman served as president and COO from mid-2008 to late 2009 and subsequently as president. Mr. Newman’s prior senior management roles included executive VP of Performance, executive VP and COO, SVP of Human Resources, Information Process Solutions, and Treasury, and VP of Performance and Technology. He also has served as regional manager for the Asia and Australia Region and in international field and operations management positions, including Project Engineer, Rig Manager, Division Manager, Region Marketing Manager and Region Operations Manager. He joined the company in 1994 in the Corporate Planning Department.
Bank of America (BAC) This is a stock that Paulson has been letting go of. And with good reason. BAC trades, not surprisingly, at - 38.9 times EPS, 0.7 times book value per share, and 1.3 times revenues per share. In comparison, the industry averages are 28.2, 0.9, and 1.4, respectively. It is also worth noting that BAC traded near three times sales from 2001 to 2007. EPS was - $0.37 in 2010, after showing - $0.27 in 2009. The Street expects EPS to turn around in 2011. They give a range of $1.05 to $1.75. The company reports Q1 2011 results on April 11. As we wrote about here, we hate Bank of America and think Buffett was spot on when he dumped shares.
Pfizer (PFE): This is smart money idea that David Einhorn also loves trades with a P/E multiple of 19.1, P/B multiple of 1.8, and P/S multiple of 2.3. The respective industry averages are 13, 2.7, and 2.5. From 2004 to 2007, the respective P/S multiples were 3.9, 3.4, 3.9, and 3.3.
In 2010, EPS was $1.02, which was a decrease of 17.07%, after growing by 2.5% in 2009. For 2011, the company expects EPS to be between $1.09 and $1.24. Moreover, for 2012, the company is aiming toward an EPS between $1.58 and $1.73.
Wells Fargo (WFC): We think Paulson is right that Wells is among the best of the big banks. Wells has done a great job of maintaining and gaining market share in all of its operating segments while keeping a tight leash on expenses. WFC trades at $32.10 at the time of writing.