John Paulson (Trades, Portfolio) made billions in the housing crash and employs an event-driven arbitrage investing strategy at his firm Paulson & Co., where he manages about $19.5 billion. Outsized bets tend to make the manager’s returns vary to extremes. For instance, in recent years his funds lost as much as 36% for 2014, after gaining as much as 46% in 2013.
In the third quarter, the investor started nine stock positions, holding 61 positions in total with a value of $18.7 billion. Paulson had a large bet on healthcare overall, with 48.3% of his portfolio invested in the sector.
Drug manufacturers in particular attracted his interest, where merger and arbitrage activity has abounded this year. Paulson bought shares of five of the companies during the quarter, only trimming 1.2% of his existing position in Valeant (VRX, Financial) and keeping positions in Mylan NV (MYL, Financial) and Mallinckrodgt PLC (MNK, Financial) unchanged.
Drug manufacturer buys
Perrigo Co. PLC (PRGO, Financial)
As his largest new position, Paulson bought 2,938,500 shares of Perrigo Co. PLC, representing 2.47% of his portfolio. Shares of the company traded at an average price of $183 for the third quarter.
Perrigo Co PLC was incorporated under the laws of Ireland on June 28, 2013. Perrigo Co Plc has a market cap of $22.36 billion; its shares were traded at around $152.76 with a P/E ratio of 153.50 and P/S ratio of 4.37. The dividend yield of Perrigo Co Plc stocks is 0.32%. Perrigo Co. PLC had an annual average earnings growth of 13.80% over the past 5 years.
Endo International PLC (ENDP, Financial)
Paulson also started a position in Endo International PLC of 1.71 million shares worth 0.63% of his portfolio. Its shares traded at an average price of $80.
Endo International PLC was incorporated in Ireland on Oct. 31, 2013. Endo International PLC has a market cap of $13.24 billion; its shares were traded at around $58.45 with and P/S ratio of 3.14.
Teva Pharmaceuticals Industries Ltd. (TEVA, Financial)
Paulson increased his existing position in Teva Pharmaceuticals by 786.5% to 18 million shares. The position was worth 5.4% of his portfolio and represented 2.1% of the company’s outstanding shares.
Teva Pharmaceutical Industries Ltd. was incorporated in Israel on February 13, 1944. Teva Pharmaceutical Industries Ltd. has a market cap of $51.13 billion; its shares were traded at around $60.01 with a P/E ratio of 29.06 and P/S ratio of 2.60. The dividend yield of Teva Pharmaceutical Industries Ltd. stocks is 2.26%. Teva Pharmaceutical Industries Ltd. had an annual average earnings growth of 14.6% over the past 10 years. GuruFocus rated Teva Pharmaceutical Industries Ltd. the business predictability rank of 3-star.
Synergy Pharmaceuticals Inc. (SGYP, Financial)
Paulson boosted his holding of Synergy Pharmaceuticals by 55.7% to 9 million shares. The holding reflected 0.25% of Paulson’s portfolio and 7.9% of the company’s outstanding shares.
Synergy Pharmaceuticals Inc. was incorporated under the laws of the State of Florida on Nov. 15, 2005 as Pawfect Foods Inc. Synergy Pharmaceuticals Inc. has a market cap of $702.49 million; its shares were traded at around $6.10. Synergy Pharmaceuticals Inc. had an annual average earnings growth of 35.3% over the past five years.
Paulson also made a minor increase of 0.11% to his largest portfolio position, Allergan PLC. He held 7.182 million shares of the company, a position worth 10.4% of his portfolio. The company’s price per share averaged about $307.
Allergan PLC, formerly known as Actavis PLC, was incorporated in Ireland on May 16, 2013. Allergan PLC has a market cap of $118.11 billion; its shares were traded at around $299.68 with a P/E ratio of 38.03 and P/S ratio of 5.13. The dividend yield of Allergan PLC stocks is 0.09%. Allergan PLC had an annual average earnings growth of 3.8% over the past five years.
Gold
Paulson held on to his stake in gold in the third quarter, now slipped to his seventh largest fund holding. He had 9,234,852 shares of the SPDR Gold Trust ETF (GLD, Financial), unchanged since the second quarter of 2012. Though the metal robbed him of some returns this year, declining almost 10% to a five-year low last week, Paulson said in July when it traded around the same price, “I think gold is fairly valued today,” Reuters reported.
The position, encompassing 5.3% of his portfolio, had a total value of around $987 million, less than half the value of his top holding.
See more John Paulson (Trades, Portfolio) stocks at his portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days.
