Both John Paulson and David Tepper manage funds that have had remarkable success. Paulson is the manager of several hedge funds with assets under management of $29 billion, and garnered returns of 61.1% during the market crash of 2008. David Tepper is the founder of Appaloosa Management, a $12 billion hedge fund investment firm that achieved 132.72% returns in 2009. Paulson has a proclivity for merger arbitrage; both he and Tepper share a focus on distressed assets. They both also tend to invest heavily in financial companies, particularly banks, but they hold three non-financial stocks in common: Strategic Hotels & Resorts Inc. (BEE, Financial), SuperMedia Inc. (SPMD, Financial) and International Paper Co. (IP, Financial).
STRATEGIC HOTELS & RESORTS INC. (BEE)
John Paulson owns 8,000,000 shares of BEE, valued as $42 million as of Dec. 31, 2010, which accounts for 0.14% of his equity portfolio. David Tepper owns 56,738 shares of BEE, valued at $0.3 million as of Dec. 31, 2010, which accounts for 0.01% of his equity portfolio.
Strategic Hotels & Resorts Inc. is a real estate investment trust which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States, Mexico and Europe. Strategic Hotels & Resorts Inc. has a market cap of $909.6 million; its shares were traded at around $6 with and P/S ratio of 1.4.
This is the kind of investment toward which both Paulson and Tepper would likely gravitate. The stock price began freefalling beginning in late 2007, bottoming out at less than $1 in early 2009. Paulson bought in during the second quarter of 2010 as the stock began to make a meager increase, purchasing 8 million shares at an average price of $5.01. Tepper bought in slightly earlier, during the third quarter of 2009, purchasing 1,414,658 at an average price of $1.38. He reduced his shares by a small amount in the first quarter of 2010, purchased more in the second quarter, and reduced his stake by 94.96% in the fourth quarter of 2010. He now owns 56,738 shares.
The company has not had a quarter of net income in the black in a year, although it lost the least amount in the fourth quarter of 2010 – $127,000. The stock has equally grim earnings per share, with no positive quarters in a year and -0.84% in the fourth quarter of 2010.
To revive itself, the company is restructuring its balance sheet primarily by selling several investments including all of its European holdings, having a common stock offering and making several other changes.
Strategic Hotels & Resorts Inc. is held by two other gurus.
SuperMedia Inc. (SPMD)
John Paulson owns 2,607,504 shares of SPMD, valued as $23 million as of Dec. 31, 2010, which accounts for 0.08% of his equity portfolio. David Tepper owns 466,564 shares of SPMD, valued as $4 million as of Dec. 31, 2010, which accounts for 0.08% of his equity portfolio.
SuperMedia Inc., based in Dallas, Texas, is an advertising agency for local small- to medium-sized businesses across the United States. Supermedia Inc. has a market cap of $95.8 million; its shares were traded at around $6.18 with a P/E ratio of 2.1 and P/S ratio of 0.1.
John Paulson purchased over 2.6 million shares of SuperMedia in the first quarter of 2010 at an average price of $39.98; the price as of April 14, 2011, is approximately $6. Tepper bought about half a million shares in the first quarter of 2010, but sold over 30,000 shares by the third quarter of 2010. As of the quarter ended Dec. 31. 2010, he owns 466,564 shares.
Supermedia Inc. is actually the new name of a company called Idearc that underwent a debt reorganization plan with its major creditor groups (Chapter 11 bankruptcy) effective Dec. 31, 2009, that reduced its total debt from over $9 billion to $2.75 billion of secured bank debt. The company’s initial capitalization consisted of 60 million shares of common stock; Paulson & Co. Inc. had a standby purchase agreement that closed on Dec. 31, 2009.
In its 2010 financial results, the company announced that they had reduced total debt obligations by $579 million, and that its advertising sales in the fourth quarter declined 15.1%, compared to a decline of 20.9% the same quarter in 2009. The company installed a new CEO, Peter J. McDonald, who has a background in the yellow pages industry.
Prem Watsa is the only other guru holding SuperMedia Inc.
INTERNATIONAL PAPER CO. (IP)
John Paulson owns 2,558,300 shares of IP, valued as $70 million as of Dec. 31, 2010, which accounts for 0.24% of his equity portfolio. David Tepper owns 5,399,622 shares of IP, valued as $147 million as of Dec. 31, 2010, which accounts for 2.99% of his equity portfolio.
International Paper Co. is a global paper and forest products company thatis complemented by an extensive distribution system. International Paper Co. has a market cap of $12.68 billion; its shares were traded at around $28.83 with a P/E ratio of 14 and P/S ratio of 0.5. The dividend yield of International Paper Co. stocks is 2.6%. International Paper Co. had an annual average earnings growth of 3.3% over the past 10 years.
Paulson bought approximately $2.6 million shares of International Paper at $25.06 in the fourth quarter of 2010. Tepper bought in during the third quarter of 2010, purchasing almost 2 million shares at an average price of $22.64. In the fourth quarter of 2010, he increased his stake by almost 3.5 million shares at an average price of $25.06.
International Paper’s stock hit a five-year low of approximately $6 in the first quarter of 2009; its net income was a loss of $202 million in the quarter ended Dec. 31, 2009, and $162 million in the quarter ended March 31, 2010. Since then, it has emerged strong, having positive net income each successive quarter and $361 million net income the quarter ended Dec. 31, 2010. Over the last 12 months, it has had revenue growth of 6.7%.
On March 29, the company announced it would boost its quarterly dividend by 40% to $0.2625 per share. It will also purchase a $257 million majority stake in Andhra Pradesh Paper Mills, the third largest paper company in India, where demand for paper is growing.
Six other gurus hold International Paper in their portfolios.
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STRATEGIC HOTELS & RESORTS INC. (BEE)
John Paulson owns 8,000,000 shares of BEE, valued as $42 million as of Dec. 31, 2010, which accounts for 0.14% of his equity portfolio. David Tepper owns 56,738 shares of BEE, valued at $0.3 million as of Dec. 31, 2010, which accounts for 0.01% of his equity portfolio.
Strategic Hotels & Resorts Inc. is a real estate investment trust which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States, Mexico and Europe. Strategic Hotels & Resorts Inc. has a market cap of $909.6 million; its shares were traded at around $6 with and P/S ratio of 1.4.
This is the kind of investment toward which both Paulson and Tepper would likely gravitate. The stock price began freefalling beginning in late 2007, bottoming out at less than $1 in early 2009. Paulson bought in during the second quarter of 2010 as the stock began to make a meager increase, purchasing 8 million shares at an average price of $5.01. Tepper bought in slightly earlier, during the third quarter of 2009, purchasing 1,414,658 at an average price of $1.38. He reduced his shares by a small amount in the first quarter of 2010, purchased more in the second quarter, and reduced his stake by 94.96% in the fourth quarter of 2010. He now owns 56,738 shares.
The company has not had a quarter of net income in the black in a year, although it lost the least amount in the fourth quarter of 2010 – $127,000. The stock has equally grim earnings per share, with no positive quarters in a year and -0.84% in the fourth quarter of 2010.
To revive itself, the company is restructuring its balance sheet primarily by selling several investments including all of its European holdings, having a common stock offering and making several other changes.
Strategic Hotels & Resorts Inc. is held by two other gurus.
SuperMedia Inc. (SPMD)
John Paulson owns 2,607,504 shares of SPMD, valued as $23 million as of Dec. 31, 2010, which accounts for 0.08% of his equity portfolio. David Tepper owns 466,564 shares of SPMD, valued as $4 million as of Dec. 31, 2010, which accounts for 0.08% of his equity portfolio.
SuperMedia Inc., based in Dallas, Texas, is an advertising agency for local small- to medium-sized businesses across the United States. Supermedia Inc. has a market cap of $95.8 million; its shares were traded at around $6.18 with a P/E ratio of 2.1 and P/S ratio of 0.1.
John Paulson purchased over 2.6 million shares of SuperMedia in the first quarter of 2010 at an average price of $39.98; the price as of April 14, 2011, is approximately $6. Tepper bought about half a million shares in the first quarter of 2010, but sold over 30,000 shares by the third quarter of 2010. As of the quarter ended Dec. 31. 2010, he owns 466,564 shares.
Supermedia Inc. is actually the new name of a company called Idearc that underwent a debt reorganization plan with its major creditor groups (Chapter 11 bankruptcy) effective Dec. 31, 2009, that reduced its total debt from over $9 billion to $2.75 billion of secured bank debt. The company’s initial capitalization consisted of 60 million shares of common stock; Paulson & Co. Inc. had a standby purchase agreement that closed on Dec. 31, 2009.
In its 2010 financial results, the company announced that they had reduced total debt obligations by $579 million, and that its advertising sales in the fourth quarter declined 15.1%, compared to a decline of 20.9% the same quarter in 2009. The company installed a new CEO, Peter J. McDonald, who has a background in the yellow pages industry.
Prem Watsa is the only other guru holding SuperMedia Inc.
INTERNATIONAL PAPER CO. (IP)
John Paulson owns 2,558,300 shares of IP, valued as $70 million as of Dec. 31, 2010, which accounts for 0.24% of his equity portfolio. David Tepper owns 5,399,622 shares of IP, valued as $147 million as of Dec. 31, 2010, which accounts for 2.99% of his equity portfolio.
International Paper Co. is a global paper and forest products company thatis complemented by an extensive distribution system. International Paper Co. has a market cap of $12.68 billion; its shares were traded at around $28.83 with a P/E ratio of 14 and P/S ratio of 0.5. The dividend yield of International Paper Co. stocks is 2.6%. International Paper Co. had an annual average earnings growth of 3.3% over the past 10 years.
Paulson bought approximately $2.6 million shares of International Paper at $25.06 in the fourth quarter of 2010. Tepper bought in during the third quarter of 2010, purchasing almost 2 million shares at an average price of $22.64. In the fourth quarter of 2010, he increased his stake by almost 3.5 million shares at an average price of $25.06.
International Paper’s stock hit a five-year low of approximately $6 in the first quarter of 2009; its net income was a loss of $202 million in the quarter ended Dec. 31, 2009, and $162 million in the quarter ended March 31, 2010. Since then, it has emerged strong, having positive net income each successive quarter and $361 million net income the quarter ended Dec. 31, 2010. Over the last 12 months, it has had revenue growth of 6.7%.
On March 29, the company announced it would boost its quarterly dividend by 40% to $0.2625 per share. It will also purchase a $257 million majority stake in Andhra Pradesh Paper Mills, the third largest paper company in India, where demand for paper is growing.
Six other gurus hold International Paper in their portfolios.
To check the consensus holdings of any combination of your favorite Gurus, please go to Aggregated Portfolio of Gurus. This is one of the features that GuruFocus offers to Premium Members of GuruFocus. If you are not a Premium Member, why not Take a 7-Day Free Trial?
