John Paulson is the president and portfolio manager of Paulson & Co. Inc. Paulson & Co. was ranked by Absolute Return Magazine as the third-largest hedge fund in the world managing approximately $29 billion in merger, event and distressed strategies. Steven Meyer, author of the article and market analyst has said “Paulson's working strategy is magnificent. His ability to learn of takeover plans to invest is outstanding. He has always made very smart moves.”
Prior to forming Paulson in 1994, Paulson was a general partner of Gruss Partners and a managing director in mergers and acquisitions at Bear Stearns.
This former mergers and acquisitions banker established his firm as a merger arbitrage hedge fund manager, seeking to make money from situations when one public company announces plans to take over another. Merger arbitrage hedge funds primarily study equity markets, but they also research the market for credit default swaps, a form of insurance that starts paying out as soon as a credit security falls in value.
The latest stocks include:
Bank of America Corporation: Bank of America is one of the largest financial institutions in the United States and the world, with lending operations in the consumer, small business, and corporate space, in addition to asset management and investment banking divisions. The company has operations in all 50 states.
In the last quarter, it reported net income of $6.2 billion, or $0.56 per diluted share. Most importantly Bank of America managed to build capital during the quarter, increasing its reported tangible common equity ratio to 6.25% from 5.87%.
Many of Bank of America's past problems were a result of poor capital allocation decisions. The company's size along with increased regulatory scrutiny, have reduced this risk going forward.
Agnico-Eagle Mines: Agnico-Eagle Mines is a mid-tier gold miner operating six mines in Canada, Mexico, and Finland. It currently produces more than 1 million ounces of gold annually. At the end of the year, Agnico's gold reserves totaled 21.3 million ounces. The firm prefers to operate in mining-friendly countries in North and South America as well as Northern Europe.
Agnico ended the year with $141 million in cash against $650 million in debt and a debt/capital ratio of roughly 15%. This shows that it is in good financial health.
Management has exhibited an impressive ability to construct mines on time and generally meet output forecasts.
Talisman Energy Inc: Talisman Energy explores and develops oil and gas resources around the globe, including unconventional gas in North America and offshore oil and gas fields in the North Sea and Southeast Asia, where high GDP growth and increasing electricity requirements should sustain demand for natural gas and liquid natural gas and maintain premium pricing.
The company held a cash position of CAD 1.6 billion at the end of 2010 and has undrawn credit facilities with multiple banks, thus adding up to $2.8 billion. Talisman's interest coverage ratio is expected to increase from 31 times in 2010 to more than 40 times by 2015, as additional production in North America and Southeast Asia comes on line.
Talisman's financing strategy relies on internally generated cash flows and asset divestitures to fund exploration and development.
Transocean Ltd: Transocean is an offshore drilling company. Its fleet of 135 vessels includes drill ships, semisubmersibles, and jackups, which operate in technically demanding environments such as Brazil, Nigeria, and the North Sea. It contracts primarily with some of the largest global exploration and production companies.
The firm's backlog of $24 billion provides stability and Management's decision to return $15 billion to shareholders a few years ago is a clever way to monetize the backlog's value.
It is estimated that the net asset value of Transocean's rig fleet is $21.5 billion, or $61 per share.
Citigroup Inc: Citigroup is a global financial services company doing business in more than 160 countries and jurisdictions. It serves commercial and consumer clients through its regional consumer banking segment and provides investment banking, treasury, and securities services through its institutional clients group.
Citigroup is now in good financial health, with a tangible common equity ratio of 7.5% and an allowance for loan losses sufficient to cover more than 5% of its loan book. The company is also now consistently profitable.
Prior to forming Paulson in 1994, Paulson was a general partner of Gruss Partners and a managing director in mergers and acquisitions at Bear Stearns.
This former mergers and acquisitions banker established his firm as a merger arbitrage hedge fund manager, seeking to make money from situations when one public company announces plans to take over another. Merger arbitrage hedge funds primarily study equity markets, but they also research the market for credit default swaps, a form of insurance that starts paying out as soon as a credit security falls in value.
The latest stocks include:
Bank of America Corporation: Bank of America is one of the largest financial institutions in the United States and the world, with lending operations in the consumer, small business, and corporate space, in addition to asset management and investment banking divisions. The company has operations in all 50 states.
In the last quarter, it reported net income of $6.2 billion, or $0.56 per diluted share. Most importantly Bank of America managed to build capital during the quarter, increasing its reported tangible common equity ratio to 6.25% from 5.87%.
Many of Bank of America's past problems were a result of poor capital allocation decisions. The company's size along with increased regulatory scrutiny, have reduced this risk going forward.
Agnico-Eagle Mines: Agnico-Eagle Mines is a mid-tier gold miner operating six mines in Canada, Mexico, and Finland. It currently produces more than 1 million ounces of gold annually. At the end of the year, Agnico's gold reserves totaled 21.3 million ounces. The firm prefers to operate in mining-friendly countries in North and South America as well as Northern Europe.
Agnico ended the year with $141 million in cash against $650 million in debt and a debt/capital ratio of roughly 15%. This shows that it is in good financial health.
Management has exhibited an impressive ability to construct mines on time and generally meet output forecasts.
Talisman Energy Inc: Talisman Energy explores and develops oil and gas resources around the globe, including unconventional gas in North America and offshore oil and gas fields in the North Sea and Southeast Asia, where high GDP growth and increasing electricity requirements should sustain demand for natural gas and liquid natural gas and maintain premium pricing.
The company held a cash position of CAD 1.6 billion at the end of 2010 and has undrawn credit facilities with multiple banks, thus adding up to $2.8 billion. Talisman's interest coverage ratio is expected to increase from 31 times in 2010 to more than 40 times by 2015, as additional production in North America and Southeast Asia comes on line.
Talisman's financing strategy relies on internally generated cash flows and asset divestitures to fund exploration and development.
Transocean Ltd: Transocean is an offshore drilling company. Its fleet of 135 vessels includes drill ships, semisubmersibles, and jackups, which operate in technically demanding environments such as Brazil, Nigeria, and the North Sea. It contracts primarily with some of the largest global exploration and production companies.
The firm's backlog of $24 billion provides stability and Management's decision to return $15 billion to shareholders a few years ago is a clever way to monetize the backlog's value.
It is estimated that the net asset value of Transocean's rig fleet is $21.5 billion, or $61 per share.
Citigroup Inc: Citigroup is a global financial services company doing business in more than 160 countries and jurisdictions. It serves commercial and consumer clients through its regional consumer banking segment and provides investment banking, treasury, and securities services through its institutional clients group.
Citigroup is now in good financial health, with a tangible common equity ratio of 7.5% and an allowance for loan losses sufficient to cover more than 5% of its loan book. The company is also now consistently profitable.
