Tracking John Paulson's Paulson & Company Portfolio - Q1 2019 Update

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Includes: AABA, AEM, AGN, AU, BHC, BKD, BMY, BSIG, CELG, CNC, CZR, DIS, DISCA, DISH, ENDP, FDC, FOX, GLD, HZNP, IMPV, INSW, MDT, MNK, MYL, NG, NLSN, ODP, OSG, P, RHT, SHPG, SIRI, STC, TAK, THM, TMQ, TMUS, TRCO, TSU, TVPT, VIAB, VSM, WCG
by: John Vincent
Summary

John Paulson’s 13F portfolio value increased from $4.17B to $4.59B this quarter.

Paulson & Company's largest three positions are SPDR Gold ETF, Bausch Health, and Mylan NV.

Paulson increased BrightSphere Investment Group during the quarter.

This article is part of a series that provides an ongoing analysis of the changes made to John Paulson's 13F stock portfolio on a quarterly basis. It is based on Paulson's regulatory 13F Form filed on 05/15/2019. Please visit our Tracking John Paulson's Pau13lson & Company Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q4 2018.

This quarter, Paulson's 13F portfolio value increased ~7% from $4.17B to $4.59B. There are 53 13F securities in the portfolio although only 33 of them are significantly large equity holdings (more than 0.5% of the 13F portfolio). The article is focused on the larger holdings. The top five positions are the SPDR Gold ETF (NYSEARCA:GLD), Bausch Health (NYSE:BHC), Mylan NV (NASDAQ:MYL), Celgene Corp. (NASDAQ:CELG) and Discovery Communications (NASDAQ:DISCA) and they add up to ~42% of the portfolio.

John Paulson is best known for his highly leveraged bets against the real-estate bubble that netted him billions in the aftermath. To learn more about that, check-out the book "The Greatest Trade Ever".

Stake Disposals

Nielsen Holdings (NLSN): NLSN was a 0.76% position established in Q3 2018 at prices between $21.75 and $32 and reduced by ~60% last quarter at prices between $22 and $28. The disposal this quarter was at prices between $23.25 and $27.50. It currently trades at $23.98.

Mallinckrodt PLC (MNK): The MNK position was established in Q3 2013 at prices between $42 and $47. The seven quarters through Q4 2017 saw a combined ~60% reduction at prices between $21 and $81 and that was followed with a ~45% selling in Q3 2018 at prices between $19 and $36. The position saw another ~70% selling last quarter at prices between $15.80 and $31.60. The disposal this quarter was at prices between $16 and $25. The stock currently trades at $9.23.

Note: MNK, a July 2013 spinoff from Covidien plc started trading at around $42. Covidien plc in turn was acquired by Medtronic (MDT) in January 2015.

Shire Plc ADR (SHPG): The large 9.68% SHPG stake was established in Q3 2012 at prices between $85 and $94. In Q2 2013, the position was doubled at prices between $87 and $100. The stake was since increased, but in Q2 2015, the pattern reversed: combined ~57% selling in the next three years at prices between $127 and $227. Shire Plc got acquired by Takeda (NYSE:TAK) in a stock deal valued at $195 per share in a transaction that closed in January.

Twenty First Century Fox: FOX stake was first purchased in Q4 2017 at prices between $24.50 and $34.75 but was almost sold out next quarter at prices between $34 and $38.50. Q2 2018 saw the position built back up to a ~1.5% portfolio position at prices between $35.70 and $50. Last quarter saw a ~85% stake increase at prices between $44.50 and $49.50.

Note: In December 2017, Walt Disney Company (DIS) agreed to acquire the film & entertainment assets of Twenty First Century Fox and that transaction closed in March. What remained became Fox Corp - the assets of Fox Corp include broadcasting networks and stations, news channel, business network, and Sports - FS1 and FS2, Fox Deportes, and Big Ten Network. Terms of the transaction were ~$38 per share in cash or Disney stock subject to collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. DIS and FOX currently trade at ~$134 and ~$36.67 respectively.

Pandora (P): P was a 1.83% portfolio position established in Q3 2018 at prices between $6.75 and $10 and increased by ~130% last quarter at prices between $5.35 and $6.40. In September, Sirius XM (SIRI) agreed to acquire Pandora in an all-stock deal (1.44 shares of SIRI for each P held) and that transaction closed in February. Sirius currently trades at $5.56.

Randgold Resources: The small ~1% portfolio stake in Randgold saw a ~27% increase in Q3 2018 at prices between $61 and $77 and another ~17% increase last quarter. It was a merger arbitrage stake. Barrick Gold (NYSE:GOLD) acquired Randgold in an all-stock deal (6.128 shares of Barrick Gold for each Randgold share held) that closed in January.

Note: Barrick Gold changed its ticker symbol to GOLD from ABX after the deal for Randgold closed.

Brookdale Senior Living (BKD), Imperva Inc. (IMPV), and Office Depot (ODP): These small (less than ~1% of the portfolio each) stakes were disposed during the quarter.

New Stakes

Celgene Corp. and Takeda Pharma: CELG is a large (top five) 6.78% merger-arbitrage stake established this quarter. Bristol-Myers Squibb (NYSE:BMY) is buying Celgene in a cash-and-stock deal ($50 cash and 1 share of BMY for each share of CELG held). CELG currently trades at $96.36 and BMY at $47.74. The fairly large 5.88% TAK stake came about as a result of Takeda's Shire plc acquisition in a cash-and-stock deal ($90.99 cash and 5.034 shares of TAK for each share of SHPG held). Paulson had a ~10% portfolio stake in Shire plc for which he received these shares after that transaction closed in January. Paulson trimmed the position by ~10% during the quarter. Takeda currently trades at $17.48.

WellCare Health Plans (WCG) and Centene Corp (CNC): Centene is acquiring WellCare Health Plans in a cash-and-stock deal (3.38 shares of Centene and $120 cash for each share of WellCare Health Plans held) that was announced in late March. WCG and CNC currently trade at $278 and $56.78 respectively. Paulson has a 3.65% of the portfolio stake split almost evenly among WCG and CNC.

Bristol-Myers Squibb Calls, First Data Corp. (FDC), Versum Materials (VSM), Barrick Gold, and Fox Corp. (FOX): These are very small new stakes (less than ~1% of the portfolio each) established this quarter.

Stake Decreases

Discovery Communications: DISCA position saw a 320% stake increase in Q1 2018 at prices between $21.50 and $26.50 while next quarter there was a ~140% further increase at prices between $21 and $24. DISCA currently trades at $27.42, and the stake is now fairly large at 6.05% of the portfolio. There was a ~22% stake increase in Q3 2017 at prices between $25.50 and $32.25. Last two quarters have seen a combined ~12% trimming.

Horizon Pharmaceuticals (HZNP): The 3.84% HZNP position was purchased in Q2 2017 at prices between $9.65 and $15.75 and increased by ~40% in Q4 2017 at prices between $13 and $15. The stock is now at $25.57. There was a ~3% trimming in Q1 2018 and that was followed with a ~7% selling in Q3 2018. This quarter also saw a ~7% trimming.

Travelport Worldwide (TVPT): Travelport is being taken private at $15.75 per share in a transaction announced in December. The stock is now at $14.85. The share price dropped earlier this week due to concerns that the deal might fall through.

International Seaways (INSW): INSW position came about as a result of its spinoff from Overseas Shipholding Group (OSG) that started regular-way trading in December 2016 at ~$15 per share. It is now at $19.60. There was ~6% trimming in Q2 2017 and that was followed with ~18% selling over the last two quarters at prices between $16 and $24. This quarter saw another ~30% selling at prices between $16.50 and $19.

Note: Paulson controls ~5.7% of International Seaways.

Stake Increases

BrightSphere Investment Group (BSIG): The large 5.91% BSIG stake was built last quarter at prices between $10 and $13.30. This quarter saw a huge ~285% stake increase at prices between $11 and $14.25. The stock currently trades at $11.73.

Note: Paulson's ownership stake in BSIG is ~22%.

Altaba Inc. (AABA) previously Yahoo: The 3.85% AABA stake was established in Q2 2017 at prices between $46 and $56 and increased by ~42% the following quarter at prices between $54.50 and $67.50. Q4 2017 saw an about turn: ~55% reduction at prices between $65 and $73. It is now at $63.35. There was a ~23% stake increase last quarter at prices between $55.50 and $67 and that was followed with a ~12% increase this quarter.

Red Hat Inc. (RHT): RHT is a 1.67% of the portfolio merger arbitrage stake established last quarter and increased by ~12% this quarter. In October, IBM (NYSE:IBM) agreed to buy Red Hat for $190 per share cash. The stock is currently at ~$186.

Kept Steady

SPDR Gold Trust: GLD was Paulson's largest position by far at ~19% of the 13F portfolio as of Q1 2013. The original stake was established in Q1 2009 at prices between $83 and $98 and was reduced by ~45% in 2011 at much higher prices. It was reduced by more than half in Q2 2013 as well at prices between $116 and $155. Q4 2015 and the following quarter saw a combined ~60% reduction at prices between $100 and $122. The stock currently trades at ~$120. The remaining stake is still the largest at 11.49% of the portfolio.

Bausch Health Companies previously Valeant Pharmaceuticals: BHC position was increased by almost 300% in Q1 2015 at prices between $143 and $205 and another ~340% the following quarter at prices between $197 and $242. Q4 2015 also saw another ~50% increase at prices between $70 and $182. The aggressive buying against falling prices continued in Q2 2016: ~44% increase at prices between $19 and $36. The stock currently trades near the low end of those ranges at $24.44 and the stake has become the second-largest position in the portfolio at 11.22%.

Note: Paulson controls ~6% of Bausch Health.

Mylan Inc.: MYL is a top three position at 6.80% of the portfolio. The original stake was purchased in Q1 2010 at prices between $17 and $23. Last significant buying was in Q2 2015: ~50% increase at prices between $58 and $76. 2017 and 2018 had seen a ~50% selling at prices between $30.50 and $47. The stock currently trades at $19.65.

Allergan plc (AGN): AGN was a minutely small 0.29% of the 13F portfolio position in Q2 2014. The following two quarters saw a ~420% increase at prices between $202 and $271. Q2 2015 saw a further ~27% increase at prices between $283 and $313. In Q4 2015 there was an about-turn: a combined ~75% selling over the next two years at prices between $192 and $320. There was another ~15% reduction last quarter at prices between $167 and $193. The stock is now at ~$140 and the stake is at 4.94% of the portfolio. Last quarter saw a ~4% trimming.

AngloGold Ashanti (AU): AU is a 3.65% position. It is a long-term stake that has been in the portfolio since 2009. Q4 2015 had seen a ~9% trimming while the following quarter saw a one-third reduction at prices between $7 and $14. Q2 2016 saw another ~20% reduction at prices between $13 and $18. The stock is currently at $11.61.

Note: Paulson controls ~3% of AngloGold Ashanti.

Dish Network (DISH): DISH is a 3.43% portfolio position established in Q1 2017 at prices between $58 and $64. Q2 and Q3 2017 saw a combined ~36% stake increase at prices between $52 and $66. The stock is currently below the low end of those ranges at $34.87. There was a ~11% trimming in Q4 2017 while next quarter there was a ~19% stake increase. For investors attempting to follow Paulson, DISH is a good option to consider for further research.

T-Mobile US (TMUS): The 2.94% portfolio stake in TMUS was purchased in Q1 2017 at prices between $56.60 and $65 and increased by ~46% the following quarter at prices between $60 and $68. The three quarters through Q1 2018 had seen a combined ~37% selling at prices between $55 and $65.50 and that was followed with a similar reduction in Q3 2018 at prices between $58 and $70.50. Last quarter also saw a ~20% selling at prices between $61 and $70. The stock is now at $76.35.

Novagold (NG): NG is a ~2% of the portfolio long-term stake established in 2010. Q2 2016 saw a ~28% reduction at prices between $5 and $6.50 and that was followed with a ~13% selling in Q4 2016. The stock is currently at $3.79.

Note: Paulson has a high cost basis on NG and controls ~7% of the business.

TIM Participacoes (TSU): TSU is a 1.64% portfolio stake first purchased in Q2 2014 at prices between $24 and $30. The position had remained relatively steady since. Q1 2018 saw a ~10% selling at prices between $19.50 and $22.50. The stock is currently trading below those ranges at $13.13.

Endo International plc (ENDP): A very small ENDP stake was increased by almost 200% in Q1 2016 at prices between $28 and $61. The next two quarters saw a combined ~18% reduction at prices between $17 and $43. The stock is now at $6.32 and the stake is at 1.51% of the portfolio. There was a ~28% increase in Q1 2018 at prices between $5.50 and $9.

Viacom (VIAB): The 0.81% VIAB position saw a ~160% stake increase in Q1 2018 at prices between $29 and $34. Last quarter saw a ~50% selling at prices between $25 and $34. The stock is now at $28.81.

Agnico Eagle Mines (AEM), Caesars Entertainment (CZR), International Tower Hill Mines (THM), Stewart Information Services (STC), Tribune Media (TRCO), and Trilogy Metals (TMQ): These are small (less than ~1% of the portfolio each) stakes kept steady this quarter.

Note: Paulson has a ~32% ownership stake in International Tower Hill Mines.

The spreadsheet below highlights changes to Paulson's US stock holdings in Q1 2019:

John Paulson - Paulson & Co - Q1 2019 13F Report Q/Q Comparison

Disclosure: I am/we are long MYL,, NLSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.