John Paulson is a veteran in the hedge fund business. He founded Paulson & Co. Inc. in 1994 with $2 million seed money. However, he became famous during the financial crisis in 2007 when he placed a bet against the subprime mortgage market and won. In 2020 he reorganized his hedge fund into a family office. John Paulson’s Portfolio is worth $1.1 billion and is divided into 18 holdings.
Key Takeaways
- John Paulson’s career was marked by success in 2007 while betting against the subprime mortgage market and winning
- His prime interest lies in investing in the pharmaceutical and gold mining sectors
- Paulson’s biggest advice to investors is to invest in areas they know
- Paulson’s fund generated a 32% gain in 2023
Highest weighting holdings in Paulson’s portfolio are Madrigal Pharmaceuticals, Bausch Health Companies Inc., BrightSphere Investment Group Inc., and NovaGold Resources Inc.
Since he registered his fund as a family office the portfolio didn’t see many changes. Recently Paulson increased his positions in large holdings like Madrigal and NovaGold, combined with increases in smaller holdings including Newmark Group, and International Tower Hill Mines Ltd.
Key Holdings
Madrigal Pharmaceuticals (NASDAQ:MDGL) with 23.08% of the portfolio
Madrigal Pharmaceuticals is Paulson’s recent addition to the portfolio. He bought a massive 1.11 million shares stake in the company focused on developing cardiovascular and metabolic diseases. The fund now owns 5.60% of the entire company stake. The average buy price of the stocks is at $207. The current value of the stock dropped to $193 in a period of price volatility. The investment was made in 2023 and it still has to generate surplus. At the moment this holding generated a loss of 6.7%.
Bausch Health Companies Inc. (NYSE:BHC) with 19.13 % of the portfolio
Paulson owns a massive 26.4 million stake bought mostly during 2018 and 2019. The average buying price of stocks was $22.7 while the current value is just $8.7. The company lost more than 50% of its value in mid-2022 and is still to make a comeback. Stake in this company cost $599 million, while its value dropped to $230 million, generating a loss of 62%.
BrightSphere Investment Group Inc. (NYSE:BSIG) with 15.47% of the portfolio
BrightSphere is one of the best elements in Paulson’s portfolio. He bought a large 20 million share stake in the company in Q3 209 for a price of $10 per share. Since then he sold 11 million shares at $30 and $25. The company lost some value since then and its current share price is at $22. Despite that Paulson’s hit was great, and this holding generated a gain of 123%. Initial investment of $90.9 million increased to a current $202 million.
NovaGold Resources Inc. (NYSE AMERICAN:NG) with 7.94% of the portfolio
John Paulson is the largest stakeholder in Canada-based gold mine development. He currently owns 23.5 million shares valued at $72 million. The average buy price of the stock is $4.38 while the current stock price is at $3. After being quiet regarding this holding for almost four years, Paulson bought an additional million shares in Q4 2023. In over a decade he invested $103 million into this endeavor, while the value dropped to $72 million resulting in a loss of 30%.
Perpetua Resources Corp (TSE:PPTA) with 7.09% of the portfolio
Another company focused on gold and silver mining operations takes an important spot in Paulson’s portfolio. While NovaGold is focused on projects in Alaska, Perpetua Resources’ key project is based in Idaho. After the value of the stock was below $3 for more than two years, in 2024 it saw a rise to $6 announcing better times. The average buy price of the stock is $5.38, and the 24.8 million shares holding is valued at $140 million. That is a gain of 5.3% from the $133 million invested.
AngloGold Ashanti (NASDAQ:AU) with 6.46% of the portfolio
AngloGold is a gold mining giant that operates on four continents. Paulson owns 3.83 million shares valued at $71.65 million. Paulson’s average buy price for AngloGold stocks is $18.39 while its current value is at $23.25.
Agnico Eagle Mines Co. (NYSE:AEM) with 3.88% of the portfolio
Agnico is a mining company focused on projects in North America and Australia. Paulson restarted trading these stocks in 2022 when he bought 1.03 million shares at $54. From then he on one occasion sold 250 thousand stocks at $47.20. In 2024 the value of the stock rose to $65 increasing Paulson’s gain to 22% so far. At present the holdings value is $51.6 million.
Thryv Holdings Inc. (NASDAQ:THRY) with 3.67% of the portfolio
Two million shares in Thryv Holding are valued at $46.8 million. The average buy price for this company stock for Paulson was $13.5 while the current value jumped to $23.40. After an initial investment in 2020, he is slowly trimming this holding. In the last three years, he sold 1.22 million shares at prices between $19 and $34.
International Tower Hill Mines Ltd. (NYSE AMERICAN:THM) with 3.13% of the portfolio
Paulson is the single largest stakeholder in this Canada-oriented mining company, with a stake of 64.2 million shares. The average buy price is at $0.64 while the current price is at the same level. He invested a total of $41.1 million into the company, still waiting to bear significant gains.
Newmark Group Inc. (NASDAQ:NMRK) with 2.97% of the portfolio
This commercial real estate advisory company has been a part of Paulson’s portfolio since 2017. There are three million shares in the holding, while the average buying price of a share is $10.3. The current value of the share is $9.8. Paulson invested $31 million into the stake, while its current value is $29.5 million, generating a loss of 5.1%.
Sector Allocation
John Paulson’s portfolio is heavily concentrated in the healthcare and basic material sectors. The latter one is due to his long-time trust in gold as an asset class. Besides two primary sectors, Paulson also owns holdings in the Finance and Industrials sectors.
- Healthcare with 42.2% of the portfolio valued at $468 million
- Basic materials with 33% of the portfolio valued at $363 million
- Finance with 18.4% of the portfolio valued at $202 million
- Industrials with 5.62% of the portfolio valued at $61 million.
John Paulson Investment Philosophy & Strategies
Paulson’s investment philosophy is a blend of event-driven, distressed security investing, with a focus on identifying companies on the discount. The backbone of his every trade is a thorough fundamental analysis, combining detailed research with in-depth market assessment.
Before making any moves Paulson aims to have empirical evidence that the investment is sound. Every company goes through a detailed analysis of its financial and economic indicators. Since he often invests in distressed securities at a discount, they need to have the potential to turn things around and generate gains.
As a hedging technique, Paulson utilizes buying below the intrinsic value. Through the deep analysis of companies cash flow, and other crucial indicators he is keen on finding the real value of the company.
Besides investigating companies fundamentals Paulson has eyes on the global macro indicators. Once he gets the scent of an event that can cause a major market shift he already knows how to position his investments to get the best out of the moment.
But, besides looking at macro indicators, Paulson is also known as an event-driven investor. This means that he is often focused on identifying companies that will go through a process that will impact its value. Sometimes it is restructuring, in other cases bankruptcy or a merger.
These events can result in temporary price discrepancies from which investors can generate substantial gains if positioned properly. Paulson adds investing in distressed debt and risk arbitrage as a part of his diverse investing strategy.
John Paulson Performance Analysis
Historical Performance
When analyzing John Paulson’s performance we can see clear differences between periods. Between the inception of the fund in 1994 and his big win in 2008, the index managed to outperform the fund in four years. Some of his best years were between 2000 and 2002.
After 2008 and his big win we can see a big dip in performance ratings. In the period between 2009 and 2011, his fund generated only losses for the investors. In the last decade, according to available data the fund ended with -50.8% performance.
In 2023 the fund managed to generate 32% gains due to high profits in the pharmaceutical, and banking sectors. Gains were also bolstered by his gold stock which generated a gain of 104%. This win still doesn’t make up for the underachieving period behind the fund.
Notable Success
Highly lucrative bet against the subprime mortgage market in the mid-2000s
Paulson predicted that the housing bubble would burst. He used credit default swaps to bet against the mortgage-backed securities and won. This win earned him a $4 billion gain and a bad rap.
Notable Failure
Failure of the Advantage Plus Fund in 2011
Paulson made an early bet on the recovery of the United States economy after the world crisis in 2008. This mistimed bet resulted in a 51% loss of value for the fund.
Substantial loss of his Gold Fund
Paulus always held gold in high regard. He has a Gold Fund that is focused only on gold-related investments. The fund went through a rough patch in 2012 which caused it to lose about $20 billion in AUM.
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