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 08/14/2019. Please visit our Tracking John Paulson's Paulson & Company Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q1 2019.
This quarter, Paulson's 13F portfolio value increased ~24% from $4.59B to $5.88B. There are 51 13F securities in the portfolio although only 38 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), Allergan plc (NYSE:AGN), Discovery Communications (NASDAQ:DISCA), Celgene Corp. (NASDAQ:CELG) and they add up to ~36% 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".
Fox Corp. (FOX): The original position was a merger-arbitrage stake in Twenty First Century Fox purchased in Q2 2018 at prices between $35.70 and $50. Q4 2018 saw a ~85% stake increase at prices between $44.50 and $49.50. In December 2017, Walt Disney Company (DIS) agreed to acquire the film & entertainment assets of Twenty First Century Fox and that transaction closed this March. What remained (broadcasting networks and stations, news channel, business network, and Sports - FS1 and FS2, Fox Deportes, and Big Ten Network) became Fox Corp. 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. The stake was eliminated this quarter at prices between $33.50 and $39. The stock is currently at $32.45.
Centene Corp (CNC): Centene is acquiring WellCare Health Plans (NYSE:WCG) 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 ~$270 and $46.32 respectively. Last quarter, Paulson built almost equal positions in both. The Centene stake was disposed this quarter.
Travelport Worldwide (TVPT): Travelport went private at $15.75 per share in a transaction that closed in May. The transaction was announced last December and Paulson's 1.33% merger-arbitrage stake came about soon after.
Bristol-Myers Squibb (BMY) Calls and First Data Corp.: These were very small new stakes (less than ~1% of the portfolio each) established last quarter. First Data Corp. got acquired by Fiserv (FISV) in an all-stock deal (0.303 shares of FISV for each share First Data Corp. held) and that transaction closed last month. Bristol-Myers Squibb is acquiring Celgene. Paulson acquired a large ~5% stake in Celgene and a small ~1% stake in BMY through calls last quarter. The calls were disposed this quarter.
Anadarko Petroleum (APC): APC was a large 5.18% merger-arbitrage stake established this quarter. Occidental Petroleum (OXY) agreed to acquire Anadarko in a cash-and-stock deal ($59 cash and 0.2934 shares of OXY for each APC held) announced in May. The transaction closed earlier this month.
Sotheby's (BID) and Array Biopharma (ARRY): BID and ARRY are medium-sized merger-arbitrage stakes established this quarter. BID is being taken private at $57 per share by a group headed by Patrick Drahi. Pfizer (PFE) is acquiring Array Biopharma in a $48 per share all-cash deal announced in June.
Tesla (TSLA) Puts: The ~2% of the portfolio short stake in TSLA through Puts was established this quarter as the stock traded between $179 and $292. It currently trades at $222.
Spark Therapeutics (ONCE) and PG&E Corp. (PCG): ONCE is a merger-arbitrage stake established this quarter at prices between $97.50 and $114 and the stock currently trades at ~$100. Roche (OTCQX:RHHBY) is acquiring Spark Therapeutics in a $114.50 all-cash deal announced in February. The ~1% of the portfolio stake in PCG was purchased at prices between $17 and $24 and it is now at $10.43.
Altaba Inc. (AABA) previously Yahoo: The 2.24% 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. There was a ~23% stake increase in Q4 2018 at prices between $55.50 and $67 and that was followed with a ~12% increase last quarter. This quarter saw a ~20% selling at prices between $59 and $79. It is now at $69.48.
Red Hat Inc. (RHT): RHT was a 0.61% of the portfolio merger arbitrage stake established in Q4 2018 and increased by ~12% last quarter. In October, IBM (NYSE:IBM) agreed to buy Red Hat for $190 per share cash and that transaction closed last month.
International Seaways (INSW): INSW position came about as a result of its spin-off from Overseas Shipholding Group (OSG) that started regular-way trading in December 2016 at ~$15 per share. It is now at $17.22. There was ~6% trimming in Q2 2017 and that was followed with ~18% selling in H2 2018 at prices between $16 and $24. Last two quarters have seen another ~45% selling at prices between $16.50 and $20.25.
Note: Paulson controls ~5% of International Seaways.
Stewart Information Services (STC): The minutely small 0.37% portfolio stake in STC saw a ~10% trimming during the quarter.
Allergan plc: 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. H2 2018 also saw a ~18% selling at prices between $131 and $192. There was an about-turn this quarter: ~45% stake increase at prices between $116 and $168. The stock is now at ~$160 and the stake is at 6.40% of the portfolio.
Note: AbbVie (ABBV) is buying Allergan in a cash-and-stock deal ($120.30 cash and 0.8660 shares of ABBV for each AGN held) announced in June.
Celgene Corp.: CELG is a large (top five) 5.26% merger-arbitrage stake established last quarter. Bristol-Myers Squibb 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 $97.11. There was a marginal stake increase during the quarter.
WellCare Health Plans: 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 is currently at ~$270. Paulson bought the merger-arbitrage stake last month and increased it by ~85% during the quarter at prices between $247 and $299.
VanEck Vectors Gold Miners (GDX) Puts: The vast majority of the 2.82% Short position in GDX through Puts was purchased during this quarter as the underlying traded between $20 and $26. GDX currently trades at $29.66.
Pacira Biosciences (PCRX), Sprint (S), Trilogy Metals (TMQ), and Versum Materials (VSM): These small (less than ~1% of the portfolio each) positions were increased during the quarter. The TMQ increase was due to the execution of warrants at $1.52 per share.
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 ~$144. The remaining stake is still the largest at ~10% 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 a ~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 $21.51 and the stake has become the second-largest position in the portfolio at ~9%.
Note: Paulson controls ~6% of Bausch Health.
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 $27.73 and the stake is now fairly large (top five) at 5.28% of the portfolio. There was a ~22% stake increase in Q3 2017 at prices between $25.50 and $32.25. Last two quarters had seen a combined ~12% trimming.
Takeda Pharma (TAK): The fairly large ~4% TAK stake came about as a result of Takeda's Shire plc (NASDAQ:SHPG) 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. Takeda currently trades at $16.56.
BrightSphere Investment Group (BSIG): The ~4% BSIG stake was built in Q4 2018 at prices between $10 and $13.30. Last quarter saw a huge ~285% stake increase at prices between $11 and $14.25. The stock currently trades below those ranges at $9.06.
Note: Paulson's ownership stake in BSIG is ~22%.
AngloGold Ashanti (AU): AU is a 3.87% 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 $22.54.
Note: Paulson controls ~3% of AngloGold Ashanti.
Mylan Inc. (MYL): MYL stake is now at 3.56% 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 near the low end of those ranges at $19.90.
DISH Network (DISH): DISH is a 3.25% 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 well below the low end of those ranges at $33.77. 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.
Lyft Inc. (LYFT): LYFT is a 2.77% of the portfolio position. LYFT had an IPO in March. Shares started trading at ~$78 and currently go for ~$50. Paulson is an early investor in Lyft having participated in funding rounds prior to the IPO.
Horizon Pharmaceuticals (HZNP): The 2.73% 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 $27.55. There was a ~3% trimming in Q1 2018 and that was followed with a ~7% selling in Q3 2018. Last quarter also saw a ~7% trimming.
T-Mobile US (TMUS): The 2.46% 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. Q4 2018 also saw a ~20% selling at prices between $61 and $70. The stock is now at ~$78.
NovaGold (NG): NG is a 2.21% 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 $7.42.
Note: Paulson has a high cost basis on NG and controls ~7% of the business.
TIM Participacoes (TSU): TSU is a 1.27% 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 $14.59.
Viacom (VIAB): The 0.67% VIAB position saw a ~160% stake increase in Q1 2018 at prices between $29 and $34. Q4 2018 saw a ~50% selling at prices between $25 and $34. The stock is now at $25.16.
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 $2.46 and the stake is at 0.60% of the portfolio. There was a ~28% increase in Q1 2018 at prices between $5.50 and $9.
Agnico Eagle Mines (AEM), Barrick Gold (NYSE:GOLD), Caesars Entertainment (CZR), International Tower Hill Mines (THM), and Tribune Media (TRCO): These minutely small (less than ~0.50% of the portfolio each) stakes were 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 Q2 2019:
Disclosure: I am/we are long ABBV, MYL, OXY. 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.
Additional disclosure: We are long Fannie/Freddie pfds.