John Paulson is one of the prominent hedge fund managers on the Street. His company, Paulson & Co., has almost $30 billion of assets under management. His fund management style is distinctive and extremely complex. As a former investment banker, Paulson uses both merger arbitrage opportunities as well as credit default swap options. The billionaire businessman earned $3.7 billion dollars in 2008 by shorting the mortgage back securities. He made $4.9 billion in 2010 from his portfolio. Paulson favors financial stocks, followed by commodity and energy investments. He also holds a significant amount of gold in his portfolio. Recent filings at I-Metrix Edgar Online show that he is extremely bullish about the following companies:
Anadarko Petroleum (NYSE:APC): Anadarko is a Texas based oil and gas producer that primarily operates in U.S., Mexico, and Algeria. The company also explores in the coal, natural soda ash, and industrial mineral mines around the world. In the last quarter of 2010, Paulson increased his positions by 59%, to $1.75 billion. Currently, Paulson & Co. owns 4.23% of Anadarko. While trailing P/E ratio is 50, analysts expect the profits to increase by two-fold. Recently, Howard Weill upgraded the stock to 'market outperform' with a target price of $99.
Transocean (RIG): Transocean is another Swiss-based energy company that is expected to increase profits by more than two-fold this year. The forward P/E ratio is 11.39. Paulson initiated a new position with a current value of $567.5 million. The stock has gained 14% since January. Recently, Dahlman Rose suggested a 'strong buy' with a target price of $98.
Blackrock (BLK): Blackrock is a well-known New-York based investment titan that offers pension plans, mutual funds, to both institutional and individual investors. Paulson initiated a new purchase of 200 million stocks, currently worth $405 million. Blackrock is an extremely profitable company with gross margin of 52%, and net profit margin of 24%. Analysts expect the earnings per share to grow by 72% this year.
Genzyme (Genz): Genzyme is a biotechnology company that offers treatments for a wide range of disorders and diseases. The Massachusetts-based company also has strategic R&D alliances with Bayer, AG. Paulson invested $520 million, and he currently owns 2.59% of the company. While the stock's ytd performance was 6.7%, insiders are selling their stocks. Insiders reduced their share ownership by 30.43% in the last 6 months.
Medtronic Inc. (MDT): Medtronic is another medical company John Paulson is extremely bullish about. He initiated a new share purchase, currently worth $360.7 million. Medtronic is an immensely profitable company with a net profit margin of 20.7%. Current P/E ratio of 13.47 is much lower than the industry average. Moreover, the profits are 52% this year, implying a forward P/E ratio of 11. Last month Barclays Capital reiterated overweight status with a target price of $46. Medtronic is also a potent dividend stock with a yield of 2.28%. The company was able to double dividends from $0.11 in 2006 to $0.23 in 2010.
It is also worth reemphasizing that Paulson's hedge fund is the largest holder of SPDR gold trust (GLD). He invested 15.5% of his portfolio in gold, and he currently owns 7.89% of Gold trust. He has not changed his gold holdings, and he is cautiously waiting for the overall market sentiment on gold. Once he starts selling of his gold holdings, the prices will start falling off the cliff. If you are willing, or already invested in gold, Paulson's portfolio should be among the first things you should watch for.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.