Paulson & Co., the firm led by John Paulson (Trades, Portfolio), disclosed this week that its top five buys during the fourth quarter of 2020 were in Horizon Therapeutics PLC (HZNP, Financial), Barrick Gold Corp. (GOLD, Financial), Thryv Holdings Inc. (THRY, Financial), Alexion Pharmaceuticals Inc. (ALXN, Financial) and RealPage Inc. (RP, Financial).
The New York-based firm seeks long-term capital appreciation through merger arbitrage, seeking value in situations in which a company announces plans to acquire a second company. Paulson & Co. primarily studies equity markets although the firm may also research opportunities in credit default swaps.
As of the quarter-end, the firm's $3.85 billion equity portfolio contains 36 stocks, with eight new positions and a turnover ratio of 11%.. The top three sectors in terms of weight are health care, materials and communication services, representing 46.67%, 19.31% and 10.74% of the equity portfolio.
Horizon Therapeutics
Paulson purchased 1,300,001 shares of Horizon Therapeutics (HZNP, Financial), increasing the position 19.43% and the equity portfolio 2.47%. Shares averaged $74.23 during the fourth quarter.
GuruFocus ranks the Dublin-based drug manufacturer's financial strength 7 out of 10 on the back of a high Piotroski F-score of 7 and a strong Altman Z-score of 6.62 despite debt ratios underperforming more than half of global competitors.
Barrick Gold
Paulson purchased 2 million shares of Barrick Gold, boosting the position 129.3% and the equity portfolio 1.18%. Shares averaged $25.29 during the fourth quarter.
GuruFocus ranks the Toronto-based gold producer's financial strength 6 out of 10: Barrick Gold has a high Piotroski F-score of 7 and a debt-to-Ebitda ratio that outperforms over 70% of global competitors despite interest coverage ratios underperforming over 76% of global metals and mining companies.
Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) sold its 12 million shares in Barrick Gold during the fourth quarter of 2020.
Thryv Holdings
Paulson purchased during the fourth quarter 3,216,437 shares of Thryv Holdings (THRY, Financial), allocating 1.13% of the equity portfolio to the position. The firm then sold 315,302 shares on Feb. 16 according to GuruFocus Real-Time Picks, a Premium feature. Shares increased from the fourth-quarter average price of $10.58 to $27.
The Dallas-based company provides digital marketing and software as a service management tools to small and medium-sized businesses. According to GuruFocus, Thryv's interest coverage and debt ratios underperform over 70% of global competitors, suggesting low financial strength.
Alexion
Paulson purchased 250,000 shares of Alexion (ALXN, Financial), giving the position 1.01% equity portfolio space. Shares averaged $128.71 during the fourth quarter.
GuruFocus ranks the Boston-based biotech company's profitability 9 out of 10 on several positive investing signs, which include a three-star business predictability rank and an operating margin that is near a 10-year high of 47.12% and outperforms over 96% of global competitors.
Realpage
Paulson purchased 400,000 shares of Realpage (RP, Financial), giving the position 0.91% equity portfolio weight. Shares averaged $65.65 during the fourth quarter; the stock is modestly overvalued based on Friday's price-to-GF Value ratio of 1.21.
The Richardson, Texas-based company provides on-demand software solutions for the rental housing industry. GuruFocus ranks Realpage's financial strength 5 out of 10: Although the company has a strong Altman Z-score of 3.34, debt ratios are underperforming over 80% of global competitors.
See also
Paulson & Co. also reported that it cleansed its holding in Tiffany & Co. (TIF) during the fourth quarter. The New York-based jeweler announced on Jan. 7 that French luxury goods company LVMH Moet Hennessy Louis Vuitton SE (XPAR:MC) completed the acquisition of Tiffany at the Oct. 29, 2020, agreed price of $131.50 per Tiffany share.
Disclosure: No positions.
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