John Paulson (Trades, Portfolio) of Paulson & Co. reduced his holdings in Synergy Pharmaceuticals (SGYP, Financial) by 12.5% on Sept. 19.
Paulson founded Paulson & Co. in 1994. He serves as president and portfolio manager. The firm was established as a merger arbitrage hedge fund, meaning it focuses on company mergers, bankruptcy reorganization and distressed credit.
The guru sold 3,473,713 shares for an average price of $5.61 per share. The transaction had an impact of -0.2% on the portfolio. Paulson now holds 24,282,955 shares.
Synergy is a biopharmaceutical company that develops drugs to treat gastrointestinal disorders and diseases. The company, which is headquartered in New York, has a market cap of $994.14 million with an enterprise value of $928.7 million. It has a price-book (P/B) ratio of 21.3, a current ratio of 6.3 and a quick ratio of 6.3.
GuruFocus ranked Synergy’s financial strength 3 of 10. Its Piotroski F-Score of 3 indicates the company has a poor financial condition. Similarly, its Altman Z-Score of -1.06 places it in the distress zone, indicating the possibility of bankruptcy in the near future. The company’s cash-debt ratio of 1.86 is below the industry median of 3.22 and ranks lower than 55% of its competitors.
GuruFocus ranked the company’s profitability and growth 4 of 10. Synergy’s return on assets (ROA) is -117.5%, ranking below 97% of other companies in the industry. Its return on capital (ROC) also ranks below 98% of its competitors. Its three-year EPS growth, however, ranks above 70% of its competitors at 20.1%.
Synergy’s largest shareholder is Paulson & Co. It holds 15.4% of outstanding shares, which comprises 1.07% of its total assets managed. Paulson and Paul Tudor Jones (Trades, Portfolio) are the only shareholders among the gurus.
Synergy is one of over a dozen drug manufacturers in Paulson’s portfolio. Other notable companies in his portfolio include Valeant (VRX, Financial), Sanofi (SNY, Financial), Johnson & Johnson (JNJ, Financial) and Pfizer (PFE, Financial). Health care-related stocks have a weight of 58.1% in Paulson’s portfolio.
The DCF Calculator gives the stock a fair value of $-13.16; it was trading at $5.63 on Friday.
Disclosure: I do not own stock in any companies mentioned in the article.
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