"Tracking John Paulson’s Paulson & Company Portfolio – Q2 2016 Update"
"John Paulson’s U.S. long portfolio decreased from $13.52B to $9.84B this quarter.Paulson & Company's largest three positions are Mylan NV, Allergan plc, and Shire plc.Paulson decreased Allergan plc, Perrigo plc, & Shire plc while increasing Synergy Pharmaceuticals, and Shire during the quarter.This article is part of a series that provides an ongoing analysis of the changes made to John Paulson’s US stock portfolio on a quarterly basis. It is based on Paulson’s regulatory  filed on 08/15/2016. Please visit our  to get an idea of his investment philosophy and our  highlighting the fund’s moves during Q1 2016.This quarter, Paulson’s US long portfolio decreased ~27% from $13.52B to $9.84B. There are 86 13F securities in the portfolio although only 34 of them are significantly large equity holdings (more than 0.5% of the US long portfolio). The article is focused on the larger holdings. The top five positions Mylan NV, Shire plc, Allergan plc, Teva Pharmaceuticals, and Extended Stay America. They together account for ~45% of the entire portfolio. The largest holding is Mylan at 10.14% of the portfolio.John Paulson is best known for his highly leveraged bets against the real-estate bubble that netted him billions in the aftermath. To learn more about that story, check-out “”.Stake Disposals:Cablevision Systems (CVC): CVC was first purchased between Q4 2012 and Q2 2013 at prices between $13.65 and $18.52. Q4 2014 saw an about-turn: ~29% reduction at prices between $17.24 and $21.32 and that was followed with a ~39% reduction the following quarter at prices between $17.72 and $20.76. In Q2 2015, the pattern reversed again: ~48% increase at prices between $17.95 and $25.86. The following quarter saw a ~37% reduction at prices between $22.59 and $33.13 and that was followed with another ~60% reduction last quarter at prices between $29.46 and $33.19. In September 2015, Altice SA agreed to acquire CVC in a $34.90 all-cash deal and that deal closed in June.Lam Research (LRCX): LRCX was a 2.72% stake established in Q4 2015 at prices between $64.44 and $80.75. Last quarter saw a ~11% selling at prices between $64.21 and $82.60 and the elimination this quarter was at prices between $73 and $87. The stock currently trades at $93.19.Time Warner Cable (TWC): TWC was a 2.74% of the US long portfolio stake established in Q3 2013 at prices between $107 and $118. The position was almost doubled the following quarter at prices between $110 and $138. Since then, there was a ~50% further increase at a cost-basis of around $140. Q4 2015 saw a ~28% reduction at prices between $179 and $192 and that was followed with another ~69% reduction last quarter at prices between $176 and $206. In May 2015, Charter Communications (CHTR) agreed to buy TWC in a cash-and-stock deal and the transaction closed in May. Paulson realized huge long-term gains from this position.CIT Group (CIT) and Post Holdings (POST): These very small (less than ~1% of the portfolio each) positions were dropped this quarter.New Stakes:EMC Corporation (EMC) and VMWare Inc. (VMW): EMC and VMW are 2.77% and 1.15% of the portfolio positions respectively established this quarter. On October 12, 2015, Dell announced a deal to acquire EMC for $24.05 per share cash and 0.111 per share in VMWare (VMW) tracking stock. EMC is now at $28.71 and VMW at $72.84.Stake Decreases:Activision Blizzard (ATVI): ATVI is a very small 0.79% of the portfolio position established last quarter at prices between $28 and $39. This quarter saw a two-thirds reduction at prices between $33 and $40. The stock currently trades at $39.98 and the remaining stake is at 0.40%.Allergan plc (AGN): AGN was a minutely small 0.29% of the US long portfolio position in Q2 2014. The following two quarters saw a ~420% increase at prices between $202 and $271. Q2 2015 saw a further ~27% increase at prices between $283 and $313. In Q4 2015 there was an about-turn: ~23% reduction at prices between $253 and $323. This quarter saw another ~26% selling at prices between $202 and $278. The stock is currently at $253 and the stake is still Paulson’s third-largest at 9.78% of the portfolio.Note 1: In November 2015, Pfizer Inc. announced the acquisition of Allergan plc in a deal valued at $160B. Allergan shareholders were to receive 11.3 shares of a new company (Ireland domiciled - tax inversion deal structure) for each share held. The deal was called off in April following government pressure.Note 2: Q1 2015 had seen a ~260% increase in AGN (then Actavis). Part of that increase was due to the acquisition of Allergan by Actavis. Paulson held 6.37M shares of Allergan for which he received ~2.35M shares. That stake was established in Q2 2014 at prices between $117 and $174. Actavis plc agreed to acquire AGN in a cash-and-stock deal valued at $219 per share and that transaction closed in March 2015.American International Group (AIG): AIG is a fairly large 4.87% of the US long portfolio stake established in Q1 2015 at prices between $48.87 and $56.11. Q4 2015 saw a ~21% reduction at prices between $56.82 and $64.12 and that was followed with a ~3% trimming last quarter. This quarter saw another ~19% reduction at prices between $48.79 and $58.32. The stock currently trades at $58.86.Note: Carl Icahn has a ~3.9% activist stake in the business.AngloGold Ashanti (AU): AU is a 2.35% position. It is a long-term stake that has been in the portfolio since 2009. Q4 2015 had seen a ~9% trimming while last quarter saw a further one-third reduction at prices between $7.10 and $13.95. This quarter saw another ~19% reduction at prices between $13.26 and $18.06. The stock currently trades at $19.17. Paulson still controls ~3% of the business.Akorn Inc. (AKRX): The 2.61% AKRX position was first purchased in Q4 2015 at prices between $22.06 and $37.34 and increased by ~225% last quarter at prices between $18.72 and $38.52. The stock is now at $29.27. This quarter saw minor trimming.B/E Aerospace (BEAV): BEAV is a ~0.5% of the portfolio stake purchased last quarter at prices between $38 and $47 and reduced by two-thirds this quarter at prices between $42.73 and $50.10. The stock is now at $49.48.Cobalt International Energy (CIE): CIE was a minute 0.12% of the US long portfolio stake as of Q1 2013. The position was increased to a substantial 2.63% stake in Q2 2013 at prices between $25 and $29. The stake was more than doubled in Q1 2014 at prices between $15.85 and $19.46 and the following quarter saw a further 52% increase at prices between $17.20 and $19.36. The stock currently trades at $1.33 and the stake stands at 0.53% of the US long portfolio (9.5% of the business). Last two quarters have seen marginal reductions. Paulson & Co. has large unrealized losses on this position.Endo International plc (ENDP): A very small ENDP stake was increased by almost 200% last quarter at prices between $28.27 and $61.22. The stock is now well below that range at $23.03. The stake is at 1.44% of the portfolio. This quarter saw a ~6% trimming.Grifols S A (GRFS): GRFS is a 1.24% of the US long portfolio position. There was a ~30% reduction in Q4 2015 at prices between $15.20 and $17.79 while last quarter saw a ~41% increase at prices between $14.20 and $16.20. This quarter saw a ~58% selling at prices between $14.54 and $17.30. The stock is now at $16.40. The original stake is from 2011 and Paulson’s cost-basis on that was very low.Mallinckrodt PLC (MNK): MNK is a 5.17% of the US long portfolio position established in Q3 2013 at prices between $42 and $47.20. Q2 & Q3 2014 saw a combined 55% increase at prices between $60 and $90. There was some selling in H1 2015: ~28% reduction at prices between $94 and $130. Q4 2015 saw the patter reverse: ~31% increase at prices between $53.41 and $76.66. The stock currently trades at $81.07. The current stake is at ~7.7% of the business. Last quarter saw a very minor increase while this quarter saw a ~6% trimming.Note: MNK, a July 2013 spinoff from Covidien plc started trading at around $42. Covidien plc in turn was acquired by Medtronic (MDT) in January 2015.Mylan Inc. (MYL): MYL is now the largest position at 10.14% of the US long portfolio. The original stake was purchased in Q1 2010 at prices between $17 and $23. Q1 2013 saw a 25% reduction at prices between $27.54 and $31 and the following quarter saw another one-third reduction at prices between $28.70 and $32. Q4 2014 saw an about-turn: ~20% increase at prices between $45.27 and $58.62 and that was followed with a ~47% increase in Q2 2015 at prices between $57.94 and $76.06. The stock trades currently at $48.66. Last two quarters had seen minor increases while this quarter saw marginal trimming.Novagold (NG): NG is a small 1.60 % of the portfolio long-term stake established in 2010. This quarter saw a ~28% reduction at prices between $5 and $6.50. The stock is currently at $6.04. Paulson has a high cost-basis on NG and controls ~8% of the business.Perrigo plc (PRGO): The 2.50% portfolio stake as of last quarter was almost eliminated this quarter at prices between $87 and $131. The stock is now at $91.83. The original position is from Q3 2015 at prices between $153 and $194. Last two quarters had seen minor trimming.Note: PRGO was a merger arbitrage stake: Mylan (MYL) made a hostile takeover bid for PRGO but the tender offer lapsed in November 2015.Realogy Holdings (RLGY): RLGY is a 1.41% of the US long portfolio (~3.3% of the business) position that was reduced by two-thirds over the last six quarters at prices between $28 and $49. The original investment was made prior to the October 2012 IPO. The stock currently trades at $26.69.Shire PLC ADR (SHPG): SHPG is a top-three stake at 9.88% of the US long portfolio. It was established in Q3 2012 at prices between $85 and $94. In Q2 2013, the position was doubled at prices between $87 and $100. In Q2 2014, the stake was again increased by ~36% at prices between $142 and $236. The following quarter saw a whopping ~170% increase at prices between $232 and $263. In Q2 2015, the pattern reversed: ~15% reduction at prices between $227 and $260. Last two quarters saw minor increases while this quarter saw a ~26% reduction at prices between $165 and $192. The stock currently trades at $200.Starwood Hotels & Resorts (HOT): HOT is a 3.38% of the US long portfolio position established in Q2 2015 at prices between $80.55 and $87.53 and increased by ~30% the following quarter at prices between $64.53 and $85.62. Q4 2015 saw a ~26% reduction at prices between $66 and $80 and that was followed with a ~52% reduction last quarter at prices between $59 and $84. There was another ~19% selling this quarter at prices between $70 and $83. The stock currently trades at $79.51.Note: Following CEO exit in February 2015, Starwood said they were exploring strategic alternatives to increase shareholder value. In November, Marriott International (MAR) announced a merger with HOT in a cash-and-stock deal ($21 cash and 0.8 shares of MAR for each share of HOT held).Teva Pharmaceuticals (TEVA): TEVA was a very small 0.55% of the US long portfolio stake established in Q2 2015 at prices between $58.91 and $67.14. It was increased to a fairly large 5.28% position the following quarter at prices between $55 and $72. Q4 2015 saw a further ~13% increase at prices between $56 and $66. The stock currently trades at $52.99 and it is a top-five stake at 8.56%. Last quarter saw a minor increase while in this quarter there was a ~19% reduction at prices between $48.53 and $57.25.T-Mobile USA (TMUS): The stake was acquired as a result of the reverse-merger and IPO transaction of MetroPCS with T-Mobile USA. MetroPCS was a 2.19% of the US long portfolio established in Q3 2012. Q1 2015 saw a ~55% increase at prices between $26.87 and $33.20. Q4 2015 saw a ~16% reduction at prices between $34.56 and $41.38 while last quarter saw another ~26% selling at prices between $33.89 and $40.59. The remaining ~4% portfolio stake was almost sold out this quarter at prices between $38 and $44. The stock currently trades at $46.27. The original MetroPCS stake was a timely purchase for Paulson and he realized huge gains.American Capital Ltd. (ACAS), LivaNova plc (LIVN) previously Cyberonics (CYBX), Oasis Petroleum (OAS), and TIM Participacoes (TSU): These are very small (less than ~1% of the portfolio each) stakes further reduced this quarter.Note: Cyberonics and Italy-based Sorin Spa combined to form LivaNova in a merger that closed in October 2015. Paulson had a position in Cyberonics.Stake Increases:Valeant Pharmaceuticals (VRX): VRX position was increased by almost 300% in Q1 2015 at prices between $143 and $205 and another ~340% the following quarter at prices between $197 and $242. Q4 2015 also saw another ~50% increase at prices between $70 and $182. The aggressive buying against falling prices continued this quarter: ~44% increase at prices between $19 and $36. The stock currently trades at $28.74 and the stake is at 3.90% of the portfolio.Office Depot (ODP) and Synergy Pharmaceuticals (SGYP): These two very small stakes (less than ~1% of the portfolio each) were increased this quarter. ODP was doubled at prices between $3.14 and $7.73 and it is now at $3.52. The SGYP position saw a ~150% increase at prices between $2.67 and $4.11 and it is now well above that range at $5.15. SGYP has doubled since the lows reached in March partly due to acquisition rumors involving Allergan.Note 1: With Synergy Pharmaceuticals, although the relative size is very small, it is significant that Paulson controls ~15% of the business.Note 2: Office Depot stock price dropped sharply in May after the merger deal with Staples (SPLS) was scuttled by a federal judge.Kept Steady:Extended Stay America (STAY): STAY is a fairly large (top-five) 6.48% of the US long portfolio position. The stake came about as a result of the firm’s IPO in November 2013. STAY currently trades at $14.44 compared to the IPO offering price of $20.  Q4 2015 had seen a ~11% trimming. Paulson still controls ~21% of the business.Note: Extended Stay America filed Chapter 11 bankruptcy on June 16, 2009 and an investment group consisting of Paulson & Company, Blackstone Group, and Centerbridge Partners bought Extended Stay America out of bankruptcy in October 2010. At the time of the 11/2013 IPO, the firms already made more than three times their investment.SPDR Gold Trust (GLD): GLD was Paulson’s largest position by far at 19.03% of the US long portfolio as of Q1 2013. The original stake was established in Q1 2009 at prices between $82.71 and $97.80 and was reduced by ~45% in 2011 at much higher prices. It was reduced by more than half in Q2 2013 as well at prices between $116 and $155. Q4 2015 saw a ~38% reduction at prices between $100 and $114 and that was followed with a ~17% selling last quarter at prices between $102 and $122. The stock currently trades at $128. The remaining stake is at 6.14% of the portfolio.Agnico Eagle Mines (AEM), Caesars Acquisition (CACQ), Caesars Entertainment (CZR), Randgold Resources (GOLD), and William Lyon Homes (WLH): These are very small (less than ~1% of the portfolio each) stakes kept steady this quarter. Although the relative position sizes are small, it is very significant that Paulson has significant ~10% ownership stakes each in CACQ and CZR.Although the positions are relatively minute compared to the size of the portfolio, the following 13F stakes are significant as Paulson has sizable ownership: NovaCopper (NCQ), Overseas Shipholding Group (OSG), and Vanda Pharmaceuticals (VNDA).The spreadsheet below highlights changes to Paulson’s US stock holdings in Q2 2016:"