John Paulson is the most successful hedge fund manager of the past four years. He made $4 billion by betting against subprime mortgage investments in 2007 and another $5 billion by betting on gold and the recovery of the economy in 2010. Paulson’s Paulson & Co. manages separate client-focused portfolios, employing merger arbitrage, long/short, and event-driven strategies. Paulson uses fundamental analysis to make his investments. Paulson & Co. had 102 stocks in its 13F portfolio valued at $29.3 billion at the end of December.
According to Robert Lenzner’s article in Forbes, John Paulson’s favorite stocks were Johnson & Johnson (JNJ), Coca-Cola (KO), Pfizer (PFE), Citigroup (C), Bank of America (BAC), SunTrust Banks (STI), and Regions Financial (RF). John Paulson also recommended that it could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks.
John Paulson’s dividend stocks have gained 1.9% since the end of 2010, vs. a 5.3% gain for the S&P 500 (SPY). Here are the dividend stocks in John Paulson’s portfolio at the end of December:
1. PFIZER INC (PFE): PFE recently traded at $20.38 and has a 3.6% dividend yield. PFE gained 17.6% during the past 3 months. The stock has a market cap of $163 billion and P/E ratio of 19.9. Paulson had $399 million invested in PFE shares. Nearly 150 hedge funds own 3% of the outstanding shares of Pfizer. Hedge fund stars like Lee Ainslie, David Einhorn, David Tepper, and Curtis Schenker all own PFE in their portfolios.
2. BAXTER INTL INC (BAX): Baxter Intl. is one of the new investments in John Paulson’s portfolio. BAX recently traded at $53.12 and has a 2.3% dividend yield. BAX gained 5.56% during the past 3 months. The stock has a market cap of $31 billion and P/E ratio of 22.4. Paulson had $253 million invested in BAX shares. Tom Steyer’s Farallon Capital Management increased its BAX positions during the last quarter of 2010.
3. BLACKROCK INC (BLK): BLK recently traded at $186.5 and has a 2.3% dividend yield. BLK lost 1.46% during the past 3 months. The stock has a market cap of $38 billion and P/E ratio of 18.8. Paulson had $381 million invested in BLK shares. John Griffin’s Blue Ridge Capital, Lee Ainslie’s Maverick, John Burbank’s Passport Capital, and Andreas Halvorsen’s Viking Global are other high profile Blackrock investors.
4. MEDTRONIC INC (MDT): Medtronic is one of the new investments in John Paulson’s portfolio. MDT recently traded at $39.24 and has a 2.3% dividend yield. MDT gained 6.43% during the past 3 months. The stock has a market cap of $42.2 billion and P/E ratio of 13.2. Paulson had $339 million invested in MDT shares. Bill Miller’s Legg Mason Capital Management and David Tepper’s Appaloosa are other investors of MDT.
5. NORTHERN TR CORP (NTRS): NTRS recently traded at $50.55 and has a 2.2% dividend yield. NTRS lost 8.27% during the past 3 months. The stock has a market cap of $12.4 billion and P/E ratio of 18.7. Paulson had $55 million invested in NTRS shares.
6. ALCON INC (ACL): ACL recently traded at $165.67 and has a 2.1% dividend yield. ACL gained 1.39% during the past 3 months. The stock has a market cap of $50 billion and P/E ratio of 22.8. Paulson had $409 million invested in ACL shares. Alcon is one of the top 10 stocks hedge funds own the most of. David Tepper’s Appaloosa, John Burbank’s Passport Capital, Tom Steyer’s Farallon Capital Management, Jim Simons’ Medallion Fund and Dan Loeb’s Third Point are among these hedge funds.
7. WHIRPOOL CORP (WHR): WHR recently traded at $81.54 and has a 2.1% dividend yield. WHR lost 7.72% during the past 3 months. The stock has a market cap of 6.3 billion and P/E ratio of 10.4. Paulson had $309 million invested in WHR shares.
Disclosure: I am long C, SPY.