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John Paulson Adds to Overseas Shipholding

Stake is largest in guru's portfolio

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Kyle Ferguson
Mar 30, 2016
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John Paulson (Trades, Portfolio) added 10% to his stake in Overseas Shipholding Group Inc. (OSG, Financial) in the first quarter of 2016.

Paulson purchased the shares for an average price of $2.19, making Overseas Shipholding Group Paulson's largest holding. Paulson & Co. owns 73 stocks with a total value of $16.25 billion.

Overseas Shipholding Group was founded in 1949 and is a leading provider of global energy transportation services, delivering crude oil, petroleum products and liquefied natural gas throughout the world. It owns and operates a combined fleet of 78 vessels registered internationally and in the U.S. As of Dec. 31, 2015, the company had 890 employees.

Overseas Shipholding Group has a market cap of $733.45 million, an enterprise value of $1.04 billion, a P/B ratio of 1.39 and a quick ratio of 4.02.

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The company’s biggest risk factors, according to its most recent 10-K form, are:

  • The highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values, which could adversely affect the company’s earnings and available cash.
  • Shipping is a business with inherent risks, and Overseas Shipholding Group's insurance may not be adequate to cover its losses.
  • Overseas Shipholding Group's vessels and their cargoes are at risk of being damaged or lost because of events including but not limited to: marine disasters, bad weather, mechanical failures, human error, war terrorism and piracy, grounding fire, explosions and collisions and unforeseen circumstances or events.

According to GuruFocus, Overseas Shipholding Group has one severe warning sign. The company’s revenue has been in decline for the past five years.

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Paulson is a Queens, New York, native who was born in 1955. It was clear that Paulson stood out among his peers in his youth. While living with his family in Beechhurst, Queens, Paulson enrolled in a program for gifted students where he was able to accelerate his learning development skills.

After graduating from high school, Paulson enrolled in New York University where he studied creative writing, film production and philosophy. Paulson quickly decided to change paths after his first short-term experience in a university. He decided that he would leave school to travel to South America and stay with his wealthy uncle in Ecuador.

It was at this time that Paulson started to grasp how to run businesses, and he began shipping clothing back to his father in New York, who would then market and distribute the clothing to various department stores.

After gaining valuable business insight, as well as a global perspective from his travels. Paulson decided to return to New York University in 1976 and began to accelerate his knowledge in business. Paulson graduated in 1978 as valedictorian of his class summa cum laude in finance from New York University College of Business and Public Administration. He then went on to attend Harvard Business School, where he earned an M.B.A. as a George F. Baker Scholar in the top 5% of his class in 1980.

After graduation, Paulson began his investment career at Boston Consulting Group, where he conducted research, providing advice to companies. Paulson then landed a job working for Odyssey Partners, then he worked for Bear Stearns. Paulson worked in the mergers and acquisitions department for the company. In 1994 Paulson decided that wanted to go big with his ideas and he founded Paulson & Co. with $2 million.

Paulson & Co. is an investment management firm specializing in event-driven arbitrage strategies, including merger arbitrage, bankruptcy reorganizations and distressed credit, structured credit, recapitalizations, restructurings and other corporate events. Paulson and his firm rely on bottom up fundamental research where they have expertise. All of the company's strategies are based on compounding gains over the long term.

Cheers to your investment success.

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