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John Paulson Presents Three Long Ideas from Ira Sohn: AU, CZR, CVI

May 17, 2012 | About:
Holly LaFon

Holly LaFon

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John Paulson, the hedge fund manager whose every move has become the fascination of Wall Street, appeared unruffled.

In a slick gray suit and blue-striped tie, he delivered a pitch for three of his “long” ideas to an audience of investors gathered at Lincoln Center for the 2012 Ira Sohn conference.

The ideas are ones he is desperately hoping the market will come around to, particularly for the sake of his main funds, the Advantage and the Advantage Plus. While Mr. Paulson’s other funds are mostly faring well this year, the two Advantage funds are in negative territory so far, adding to staggering losses last year, including more than 50 percent in the Advantage Plus.

In particular, Mr. Paulson has been long gold mining stocks, such as AngloGold Ashanti (AU). The stock has been brutalized over the past several years, even as the value of gold has soared. That performance has in turn hit Mr. Paulson’s returns in his Advantage funds.

“The stock has not been a good performer over the last couple of years,” he told the crowd. “For me, that represents an opportunity.”

He said that even as revenue and profits have soared at the company in the last year, it is currently around the lowest valuation it has been in the last decade. He added that if AngloGold Ashanti were valued at the level of its peers, its share price would be about 75 percent higher (as would Mr. Paulson’s spirits and returns).

His other ideas were familiar positions for his hedge fund, Paulson & Company. He pitched Caesar’s Entertainment (CZR), the hotel and gaming company. The sector is recovering, he contends. He also listed some of the expansion the company is planning. Finally, he is hopeful that online gaming will be a new line of business for the company.

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