"Tracking John Paulson’s Paulson & Company Portfolio – Q3 2015 Update"
"John Paulson’s U.S. long portfolio decreased from $21.69B to $19.27B this quarter.Paulson & Company's largest three positions are Allergan plc, Valeant Pharmaceuticals, and Time Warner Cable.Paulson increased Teva Pharmaceuticals and Starwood Hotels & Resorts while dropping Houghton Mifflin Harcourt 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 11/16/2015. Please visit our  to get an idea of his investment philosophy and our  highlighting the fund’s moves during Q2 2015.This quarter, Paulson’s US long portfolio decreased ~11% from $21.69B to $19.27B. There are 65 13F securities in the portfolio although only 35 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 are Allergan plc, Valeant Pharmaceuticals, Time Warner Cable, Shire plc, and Startwood Hotels & Resorts and they together account for 38.56% of the entire portfolio. The largest holding is Allergan plc at 10.13% 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:Houghton Mifflin Harcourt (HMHC): HMHC is a 1.42% of the US long portfolio position established in Q4 2013 as a result of its November 2013 IPO. The company filed for Chapter 11 bankruptcy protection in March 2012. Paulson held senior debt that got converted into equity. The IPO was priced at $12 per share and it currently trades at $20.24. The disposal this quarter happened at prices between $20.24 and $26.75.DirecTV (DTV): DTV was a 4.88% of the portfolio merger arbitrage stake established in Q2 2014. AT&T (T) acquired DTV in a deal worth $95 per share ($28.50 cash and $66.60 stock) in a transaction that closed in August.New Stakes:Altera Corporation (ALTR), Cameron International (CAM), Perrigo plc (PRGO), and Precision Castparts (PCP): These are small (less than ~2.5% of the portfolio each) merger arbitrage stakes established this quarter. Intel (INTC) agreed to acquire ALTR for $54 per share cash in June and the stock is currently at $52.77. In August, Schlumberger (SLB) announced the acquisition of CAM ($14.44 cash and 0.716 shares of SLB for each share held) and it currently trades at $67.90. Mylan (MYL) made a hostile takeover bid for PRGO but the tender offer lapsed earlier this month. Berkshire Hathaway (BRK.A) (BRK.B) is acquiring PCP in a $235 per share cash deal announced in August and PCP currently trades at $231.CIT Group (CIT) and Endo International plc (ENDP): These are very small (less than ~1.5% of the portfolio each) stakes established this quarter.Stake Decreases:AngloGold Ashanti (AU): AU is a very small 1.06% AU position. It is a long-term position that has been in the portfolio since 2009. The stock currently trades at $6.54. Paulson controls ~6.2% of the business. This quarter saw a marginal reduction.Bank of America (BAC) 2019 WTS: This is a very small 0.49% of the US long portfolio position. It was reduced by ~16% in Q4 2014 and another ~14% last quarter. This quarter also saw a further ~11% reduction. As the position size is very small, the activity does not indicate a clear bias.Cablevision Systems (CVC): CVC is a 1.31% of the US long portfolio stake that was 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. Last quarter the pattern reversed again: ~48% increase at prices between $17.95 and $25.86. This quarter saw a ~37% reduction at prices between $22.59 and $33.13. The stock currently trades at $30.73.Note: In September, Altice SA agreed to acquire CVC in a $34.90 all-cash deal.Computer Sciences Corporation (CSC): CSC is a minutely small 0.22% of the US long portfolio position. It was purchased in Q1 2015 at prices between $60.68 and $71.74 and reduced by ~84% this quarter at prices between $59.81 and $67.90. The stock currently trades at $69.95.Grifols S A (GRFS): GRFS is a medium-sized 2.80% of the US long portfolio position. There have only been very minor adjustments in the last three quarters. As the recent activity is very minor, it does not indicate a change in bias.MGM Resorts (MGM): MGM was a huge position established in Q2 2010 at prices between $9.48 and $15.89. Q4 2014 saw a ~70% reduction at prices between $18.01 and $23.25 and that was followed with a ~11% reduction the following quarter at prices between $19.13 and $22.85. The stock currently trades at $22.67 and the remaining stake is at 0.52% of the portfolio. This quarter saw a minor further reduction.Oasis Petroleum (OAS): OAS was a very small 0.37% of the US long portfolio position as of Q3 2013. The stake was increased substantially to a 2.24% position in Q4 2013 at prices between $43 and $57. It was further increased by one-third in Q1 2014 at prices between $39 and $47. Q1 2015 saw a ~10% reduction at prices between $12.56 and $18.65. The stock currently trades well below his purchase price ranges at $11.61. Last two quarters have also seen minor additional selling.Shire PLC ADR (SHPG): SHPG is Paulson’s fourth-largest position at 7.25% 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. Last quarter, the pattern reversed: ~15% reduction at prices between $227 and $260. The stock currently trades at $213. This quarter saw a marginal further reduction.Note: In August, SHPG made a hostile bid for Baxalta (BXLT), the Baxter (BAX) spin-off.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. This was a timely purchase for Paulson and he has large unrealized gains. Q1 2015 saw a ~55% increase at prices between $26.87 and $33.20. The stock currently trades at $38.03. This quarter saw a minor reduction.Valeant Pharmaceuticals (VRX): VRX position was increased by almost 300% in Q1 2015 at prices between $143 and $205 and another ~340% last quarter at prices between $197 and $242. The stock currently trades at $87.34. It is a top three stake at 8.23% of the portfolio. This quarter saw a marginal reduction.Whiting Petroleum (WLL): WLL was a very small 0.31% of the US long portfolio position in Q3 2013. The stake was increased to a large 3.15% position in Q4 2013 at prices between $58 and $70. It has seen some selling since. This quarter saw a ~23% reduction at prices between $14.59 and $33.60. The stake is now at 0.76% of the portfolio (~4.7% of the business). It currently trades well below his purchase price ranges at $15.89.MGIC Investment (MTG) and Radian Group (RDN): These very small positions (less than 0.5% of the US long portfolio each) were further reduced this quarter. Although the relative sizes are very small, Paulson has very significant ownership stakes: ~3.4% of MTG and ~2.7% of RDN.Stake Increases:Allergan plc (AGN) previously Actavis plc: ACT 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. Last quarter saw a further ~27% increase at prices between $283 and $313. The stock is currently at $302 and the stake is Paulson’s largest at 10.13% of the portfolio. This quarter also saw a marginal further increase.Note: 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.Starwood Hotels & Resorts (HOT): HOT is a 5.38% of the US long portfolio position established last quarter at prices between $80.55 and $87.53 and increased by ~30% this quarter at prices between $64.53 and $85.62. The stock currently trades at $72.38.Note: Following CEO exit in February this year, Starwood said they were exploring strategic alternatives to increase shareholder value. Last week, Marriott International (MAR) announced a merger with HOT in a deal valued at ~$80.Teva Pharmaceuticals (TEVA): TEVA was a very small 0.55% of the US long portfolio stake established last quarter at prices between $58.91 and $67.14. It was increased to a fairly large 5.28% position this quarter at prices between $55 and $72. The stock currently trades at $62.36.Cyberonics Inc. (CYBX) and Post Holdings (POST): These are very small (less than ~1% of the portfolio each) stakes increased this quarter. Paulson controls ~7.4% of CYBX and ~6.1% of POST.Kept Steady:American International Group (AIG): AIG is a fairly large 4.31% of the US long portfolio stake established in Q1 2015 at prices between $48.87 and $56.11. The stock currently trades at $62.76.Note: Carl Icahn has started a huge (42.24M shares - 3.42% of the business) activist stake in the business.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 position 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 well below his purchase price ranges at $7.67 and the position stands at 1.53% of the US long portfolio (10.12% of the business).Extended Stay America (STAY): STAY is a fairly large 4.15% 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 $17.14 compared to the IPO offering price of $20.Note 1: A regulatory Form 4 filing on 11/20/2015 shows Paulson owning 42.66M shares (20.9% of the business). This is compared to 47.66M shares in the 13F.Note 2: 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.HCA Holdings (HCA): HCA was a small 0.83% of the US long portfolio position in Q2 2014. It was increased by almost 80% in Q3 2014 at prices between $54.52 and $73.48. Q4 2014 saw an about-turn as the position was reduced by ~22% at prices between $62.94 and $74.96. The stock currently trades at $67.36 and the stake is now at 1.89%.Mallinckrodt PLC (MNK): MNK is a 2.19% of the US long portfolio position established in Q3 2013 at prices between $42 and $47.20. It was increased by ~20% in Q2 2014 at prices between $60.28 and $82.70 and an additional one-third in the following quarter at prices between $68.12 and $90. The stock currently trades at $66.10. Q1 2015 saw a ~6% trimming at prices between $93.89 and $133 and last quarter saw another ~22% decrease at prices between $113 and $130. The current stake is at around ~5.6% of the business.Note: MNK, a July 2013 spinoff from Covidien plc (COV) started trading at around $42.Mylan Inc. (MYL): MYL is a 4.58% of the US long portfolio position. 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 last quarter at prices between $57.94 and $76.06. The stock trades currently at $50.88.Novagold (NG): NG is a very small 0.67% of the portfolio stake. As a percentage of the business, the position is very significant at ~11%. It is a very long-term stake and Paulson’s cost-basis is higher than the current price of $3.56.Realogy Holdings (RLGY): RLGY is a 1.38% of the US long portfolio (~4.9% of the business) position that was reduced by ~40% over the last three quarters at prices between $33.91 and $48.86. The original investment was made prior to the October 2012 IPO. The stock currently trades at $41.70.SPDR Gold Trust (GLD): GLD was Paulson’s largest position by far at 19.03% of the US long portfolio as of Q1 2013. It was reduced by more than half in Q2 2013 at prices between $116 and $155. The original stake was established in Q1 2009 at prices between $82.71 and $97.80. It was reduced by ~45% in 2011 at much higher prices and since then had been kept relatively steady. The stock currently trades at $102. Last quarter saw a ~10% reduction at prices between $112 and $118. The remaining stake is still fairly large at 5.12% of the portfolio.Time Warner Cable (TWC): TWC is a large (top three) 7.56% 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. Last quarter saw a ~7% reduction at prices between $149 and $184. The stock currently trades at $184.Note: In May, Charter Communications (CHTR) agreed to buy TWC in a cash-and-stock deal valued at $195 per share ($100 cash).WhiteWave Foods (WWAV): WWAV is a very small 0.54% of the portfolio stake kept steady this quarter.Other very small positions (less than 0.5% of the US long portfolio each) in the portfolio include Aetna Inc. (AET), Agnico Eagle Mines (AEM), BAC 2018 WTS, Caesars Acquisition (CACQ), Caesars Entertainment (CZR), Dex Media (DXM), Enzymotec Ltd. (ENZY), Felcor Lodging (FCH), Howard Hughes Corporation (HHC), International Tower Hill, Iamgold Corp. (IAG), InterXion Holding (INXN), Kamada Ltd. (KMDA), Liberty Global (LBTYA), Novacopper Inc. (NCQ), Oi SA (OIBR), Outfront Media (OUT), PharMerica Corp. (PMC), Randgold Resources (GOLD), Sandridge Energy (SD), Synergy Pharmaceuticals (SGYP), Synthesis Energy (SYMX), Synergy Pharmaceuticals (SGYP), TIM Participacoes (TSU), Vanda Pharma (VNDA), and William Lyon Homes (WLH).Note 1: Although these positions are very small relative to the size of the portfolio, it should be noted that Paulson owns significant stakes in the following businesses: 9.6% of Caesars Acquisition, ~10% of Caesars Entertainment, 12.7% of Dex Media, 19.52% of Enzymotec Ltd, 11.3% of Novacopper, 7.9% of Synergy Pharmaceuticals, 11.7% of Synthesis Energy, and 9.34% of Vanda Pharmaceuticals.Note 2: A regulatory 13D filing on 08/13/2015 showed Paulson owning 56.43M shares (19.4% of business) of Overseas Shipholding (OSGIQ).The spreadsheet below highlights changes to Paulson’s US stock holdings in Q3 2015:13G/13D/A Reports from 2/17/2015 to 5/15/2015: Synthesis Energy - 10M shares - 11.7%, MGM - 6.97M shares - 1.42%, Family Dollar - 89,200 - 0.08%, MGIC Investments - 15.25M shares - 4.49% vs 14.4M shares in 13F. AngloGold Ashanti - 26.21M shares - 6.49%. Post Holdings - 3.94M shares - 8.4% vs 1.93M shares in 13F. Vanda Pharmaceuticals - 3.63M shares - 9.14%. Cobalt International Energy - 41.75M shares - 10.12%. Caesars Entertainment - 13.61M shares - 9.43%. Enzymotec Ltd. - 4.24M shares - 19.52%. Caesars Acquisition - 12.27M shares - 9%. Whiting Petroleum - 13.45M shares - 8.01%. Realogy Holdings - 9.23M shares - 6.31%.Note: 13G/13D/A Reports (around 2/17/2015): MGM - 6.97M shares - 1.42%. Family Dollar - 89,200 - 0.08%. MGIC Investments - 15.25M shares - 4.49% vs 14.4M shares in 13F. AngloGold Ashanti - 26.21M shares - 6.49%. Post Holdings - 3.94M shares - 8.4% vs 1.93M shares in 13F. Vanda Pharmaceuticals - 3.63M shares - 9.14%. Cobalt International Energy - 41.75M shares - 10.12%. Caesars Entertainment - 13.61M shares - 9.43%. Enzymotec Ltd. - 4.24M shares - 19.52%. Caesars Acquisition - 12.27M shares - 9%. Whiting Petroleum - 13.45M shares - 8.01%. Realogy Holdings - 9.23M shares - 6.31%."