John Paulson (Trades, Portfolio), leader of investment firm Paulson & Co., disclosed on July 3 he trimmed his International Seaways Inc. INSW stake by 27.04%.
With the long-term goal of capital preservation, above-average returns and low correlation to the market, the guru’s New York-based firm specializes in event-driven arbitrage strategies, including merger arbitrage, bankruptcy reorganizations and distressed credit.
According to GuruFocus Real-Time Picks, a Premium feature, the investor sold 540,881 shares of International Seaways, reducing his holding to 1.45 million shares. Filings with the Securities and Exchange Commission show the transactions occurred from mid-May through July 1. Paulson now holds 4.99% of the company’s outstanding shares, which represents 0.64% of its equity portfolio. The stock traded for an average price of $20.15 per share.
GuruFocus data shows he has gained approximately 38% on the investment since the fourth quarter of 2016.
The U.S.-based company, which transports crude oil and petroleum products via tanker, has a $545.58 million market cap; its shares were trading around $18.73 on Friday morning with a price-book ratio of 0.53 and a price-sales ratio of 1.70.
GuruFocus estimates the stock has gained 11% year to date.
The company, which is one of the largest oil tanker companies in the world, reported first-quarter results on May 9. It posted earnings of 37 cents per share on $101.8 million in revenue, which was an improvement from a net loss of $1.01 per share on $51.9 million in revenue in the year-ago quarter.
International Seaways’ financial strength was rated 4.5 out of 10 by GuruFocus. In addition to having poor interest coverage, the Altman Z-Score of 0.45 warns the company is in danger of going bankrupt.
The company’s profitability and growth scored a 3 out of 10 rating. In addition to weak margins and returns that underperform a majority of competitors, International Seaways is weighed down by declining revenue per share. It also has a moderate Piotroski F-Score of 5, which indicates operating conditions are stable.
Of the gurus invested in International Seaways, Donald Smith (Trades, Portfolio) has the largest position with 8.06% of outstanding shares. Francisco GarcĂ Âa ParamĂ©s and Jim Simons (Trades, Portfolio)’ Renaissance Technologies are also shareholders.
Portfolio composition
Paulson’s $4.59 billion equity portfolio, which was composed of 53 stocks as of the end of the first quarter, is heavily invested in the health care sector with a weight of 46.13%.
At 1.47%, stocks in the industrials space make up a much smaller portion of the portfolio. Other industrials stocks the guru owned as of the first quarter were First Data Corp. FDC and Nielsen Holdings PLC NLSN.
Disclosure: No positions.
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