IS - Tracking John Paulson's Paulson & Company Portfolio - Q2 2022 Update

Summary

• John Paulson’s 13F portfolio value decreased from $3.25B to $2.03B this quarter.
• Paulson & Company dropped SPDR Gold ETF and Exxon Mobil while increasing Horizon Therapeutics.
• The top three positions are at 43% of the portfolio.

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 8/15/2022. 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 2022.

This quarter, Paulson’s 13F portfolio value decreased ~38% from $3.25B to $2.03B. There are 32 13F securities in the portfolio although only 26 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 Horizon Therapeutics, Bausch Health, BrightSphere Investment Group, Occidental Petroleum, and KraneShares CSI China Internet ETF. They add up to ~56% 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 ”. In July 2020, Paulson announced that they are returning all outside money and are converting to a Family Office structure.

Note 1: Last August, Paulson called a bubble in crypto (OTC:GBTC) ( OTCQX:ETHE ) saying “I would describe cryptocurrencies as a limited supply of nothing.” But he is not shorting crypto because of its volatility.

Note 2: Paulson & Company is known to have a huge position in Fannie/Freddie ( OTCQB:FNMA ) ( OTCQB:FMCC ) although the details have not been disclosed.

New Stakes:

VMware, Inc. ( VMW ), Coherent Inc., and ironSource ( IS ): These are merger-arbitrage stakes established this quarter. VMWare is getting acquired by Broadcom ( AVGO ) in a $142.50 in cash or 0.252 shares of AVGO for each share in a deal announced in May. VMW is now at ~$118. Coherent Inc. was acquired by II-VI Inc. ( IIVI ) in a cash-and-stock deal ($222 in cash and 0.91 shares of IIVI for each share) announced last May. The transaction closed in July. Unity ( U ) is buying ironSource in an all-stock deal (0.1089 shares of Unity for each share) announced in July.

Stake Disposals:

SPDR Gold Trust ETF ( GLD ): GLD was a large (top five) 5.56% of the portfolio position purchased last quarter at prices between ~$167 and ~$192. It was disposed this quarter at prices between ~$168 and ~$185. The stock currently trades at ~$161.

DiDi Global ( OTCPK:DIDIY ): DIDIY had an IPO last June. Shares started trading at ~$14 and currently goes for $2.40. Paulson’s original investment was made in fund-raising rounds in the 2016-2018 timeframe. Q3 2021 saw a ~15% stake increase at prices between ~$7.20 and ~$16.40. Last quarter saw another ~175% stake increase at prices between ~$1.75 and ~$5.35. DiDi de-listed from NYSE in June and now trades OTC. As it is no longer a 13F security it is unclear whether Paulson sold the position during the quarter.

Exxon Mobil ( XOM ): XOM was a small 2.54% stake built over the two quarters through Q1 2021 at prices between ~$32 and ~$62. Q2 2021 saw a ~50% stake increase at prices between ~$55 and ~$65. Last three quarters had seen a one-third selling at prices between ~$53 and ~$88. The elimination this quarter was at prices between ~$82 and ~$105. The stock is now at $96.31.

TIM SA ( TIMB ): The 1.40% TIMB stake was primarily built in Q1 2021 at prices between ~$11 and ~$14. Last quarter saw the position reduced by ~75% to a very small 0.43% stake at prices between ~$11 and ~$15. The remainder stake was sold this quarter. It currently trades at $11.58.

VanEck Vectors Oil Services ETF ( OIH ): The small 1.44% stake in OIH was sold this quarter.

Stake Decreases:

Occidental Petroleum ( OXY ): OXY is a large (top five) 7.26% stake that saw a ~150% increase in Q1 2021 at prices between ~$17.50 and ~$31.25. Next quarter saw another two-thirds increase at prices between ~$23.20 and ~$32.90. There was a ~25% selling in Q3 2021 at prices between ~$22 and ~$33. Last two quarters have seen a one-third reduction at prices between ~$31 and ~$71. The stock is now at ~$72.

Pacira BioSciences ( PCRX ): The ~1% PCRX stake was built in Q2 & Q3 2019 at prices between $35.50 and $48. There was a ~25% reduction in Q2 2020 at prices between $31 and $53. Q4 2021 saw a ~35% stake increase at prices between ~$48 and ~$62. The position was reduced by ~70% last quarter at prices between ~$60 and ~$77. That was followed with a ~30% selling this quarter at prices between ~$52 and ~$82. The stock is now at $52.22.

Endo International plc ( OTCPK:ENDPQ ): The ENDPQ position saw a ~50% stake increase in Q3 2020 at prices between ~$2.75 and ~$3.65. That was followed with a 25% increase in Q4 2020 at prices between ~$3.35 and ~$7.20. This quarter saw a ~55% selling at prices between ~$0.30 and ~$2.74. It is a long-term stake that has been in the portfolio since 2015. Their original ~9.6M share position was built during the three quarters through Q1 2016 at a very high cost basis. The stake had wavered over the years.

Note: Earlier this month, Endo filed for Chapter 11 bankruptcy.

Newmark Group ( NMRK ): The very small 0.61% of the portfolio stake in NMRK was reduced this quarter.

Stake Increases:

Horizon Therapeutics ( HZNP ): HZNP is currently the largest position at ~24% of the portfolio. It 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. There was a ~23% stake increase in Q3 2019 at prices between $23 and $28. Q2 2020 saw a ~16% selling at prices between $30 and $57 while in Q4 2020 there was a ~20% stake increase at prices between ~$67 and ~$84. Q3 2021 saw a ~23% reduction at prices between ~$92 and ~$110. The stock is now at $58.92. Last two quarters had seen minor trimming while this quarter there was a ~11% increase.

Bausch Health Companies ( BHC ), 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. Q2 2020 saw another ~25% stake increase at ~$16.50 per share. The stock currently trades at $5.12, and the stake is the second-largest position in the portfolio at 11%. There was a minor ~2% increase this quarter.

Kept Steady:

BrightSphere Investment Group ( BSIG ): The large (top three) ~8% BSIG stake was built in Q4 2018 at prices between $10 and $13.30. Q1 2019 saw a huge ~285% stake increase at prices between $11 and $14.25. There was a ~55% reduction in Q4 2021 at ~$31.50 per share as they participated in a fixed tender offer by the company. The stock currently trades at $17.84.

Note: Paulson’s ownership stake in BSIG is ~20%.

KraneShares CSI China Internet ( KWEB ): KWEB is a 5.35% of the portfolio position primarily built last quarter at prices between ~$21 and ~$39 and the stock currently trades at $28.83.

NovaGold Resources ( NG ): NG is a 5.27% 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. Q1 2020 saw a ~15% stake increase at prices between $5.87 and $9.51 while next quarter saw a ~12% trimming at prices between $7.40 and $12. The stock is currently at $4.50.

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

APA Corporation ( APA ): The 5.16% APA stake was purchased in Q2 2021 at prices between ~$17 and ~$23.50. Next quarter saw a ~25% selling at prices between ~$16 and ~$23. The stock is now at $39.32.

AngloGold Ashanti ( AU ) : AU is a 4.36% 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. H1 2020 had seen a ~45% reduction at prices between $14 and $30. That was followed with a ~14% selling in Q4 2020. The stock is currently at $13.71.

Perpetua Resources ( PPTA ): The ~4% PPTA stake was purchased in Q4 2020 at prices between ~$6 and ~$11 and the stock currently trades well below that range at $2.62. There was a ~18% stake increase in Q3 2021 at prices between ~$4.75 and ~$7.70.

Note: Paulson & Company has a one-third ownership stake in the business.

Barrick Gold ( GOLD ) and Seabridge Gold ( SA ): The ~4% GOLD position saw a ~130% stake increase in Q4 2020 at prices between ~$22.50 and ~$29.50. There was a ~50% increase in Q2 2021 at prices between ~$19.80 and ~$25.30. The stock is now well below those ranges at ~$15. The small 1.27% SA position saw a ~125% increase in Q4 2020 at prices between ~$17 and ~$21. There was a roughly one-third increase in Q2 2021 at prices between ~$16.15 and ~$19.75. It currently trades at $12.27.

SSR Mining Inc. ( SSRM ): The 2.57% of the portfolio stake in SSRM saw a ~140% stake increase in Q4 2021 at prices between ~$14.50 and ~$20. The stock currently trades at $13.68.

Thryv Holdings ( THRY ), previously Dex Media: The 2.36% THRY stake was established in Q4 2020 at prices between ~$8 and ~$14. Q1 2021 saw a ~12% trimming at $27 per share. Next two quarters saw another ~25% selling at prices between ~$27 and ~$41.50. The stock currently trades at $25.94. Paulson & Company has a 6.3% ownership stake in the business.

Agnico Eagle Mines ( AEM ): The 2.33% AEM position came about as a result of Agnico’s acquisition of Kirkland Lake Gold in an all-stock deal (0.7935 shares of AEM for each share held) that closed in January. Paulson & Company had a 1.303M share stake in Kirkland Lake Gold for which they received these shares. AEM currently trades at $42.30.

International Tower Hill Mines ( THM ) : THM is a 1.59% of the portfolio stake established in the 2013-2015 timeframe at a very low cost basis. Q4 2020 also saw the purchase of around 2.34M shares at ~$1.40. The stock is now at $0.53.

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

Tellurian Inc. ( TELL ): The ~1% of the portfolio TELL stake saw a ~40% stake increase last quarter at prices between ~$2.25 and ~$6.35. The stock currently trades at $3.76.

Bally’s Corporation ( BALY ), Overseas Shipholding Group ( OSG ), Equinox Gold ( EQX ), and Trilogy Metals ( TMQ ): These very small (less than ~1% of the portfolio each) positions were kept steady this quarter.

Note: Paulson has a ~7% ownership stake in Overseas Shipholding Group.

The spreadsheet below highlights changes to Paulson’s US stock holdings in Q2 2022:

For further details see: