In this article, we discuss the top 5 stock picks from John Paulson’s latest portfolio. If you want to read our discussion on Paulson’s economic outlook, go directly to Billionaire John Paulson’s 2023 Portfolio: Top 15 Stock Picks.
5. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP)
Number of Hedge Fund Holders: 75
John Paulson’s Paulson & Co.’s Holdings: $109,140,000
Percentage of John Paulson’s Paulson & Co.’s Portfolio: 9.07%
Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) or more commonly known as Horizon Therapeutics, is a Dublin, Ireland-based biopharmaceutical company that focuses on developing and commercializing medicines for rare and rheumatic diseases. The company is in the middle of a $27.8 billion takeover by Amgen Inc. (NASDAQ:AMGN). However, the deal has hit a roadblock as the US Federal Trade Commission (FTC) is expected to file a lawsuit highlighting that the proposed deal would undermine competition in the industry.
Renaissance Investment Management shared its outlook on Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) in its Q4 2022 investor letter. Here’s what the firm said:
“In the fourth quarter, Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) was our strongest performing stock, returning 83.9%. The company announced that it is being acquired by Amgen (AMGN) in a deal valued at approximately $26.4 billion. Horizon possesses several core assets, including Tepezza, the de facto drug treatment for thyroid eye disease, a solid mix of other medications, and a robust drug pipeline that should help Amgen offset potential revenue losses when several of its large drugs come off patent protection in upcoming years.”
4. Perpetua Resources Corp. (NASDAQ:PPTA)
Number of Hedge Fund Holders: 8
John Paulson’s Paulson & Co.’s Holdings: $110,233,362
Percentage of John Paulson’s Paulson & Co.’s Portfolio: 9.16%
Perpetua Resources Corp. (NASDAQ:PPTA), formerly known as Midas Gold Corp., is a mining company focused on the exploration and development of the Stibnite Gold Project in Idaho. The Stibnite Gold Project is located in the historic Stibnite Mining District and is one of the highest-grade gold deposits in the country. In a research note issued on May 15, Lucas Pipes at B. Riley gave Perpetua Resources Corp. (NASDAQ:PPTA) stock a target price of $15 and reiterated a Buy rating on the stock.
Paulson & Co was the leading hedge fund investor in the company during Q1 2023.
3. NovaGold Resources Inc. (NYSE:NG)
Number of Hedge Fund Holders: 11
John Paulson’s Paulson & Co.’s Holdings: $138,247,586
Percentage of John Paulson’s Paulson & Co.’s Portfolio: 11.49%
NovaGold Resources Inc. (NYSE:NG) is a Salt Lake City, Utah-based mining company that focuses on the exploration and development of mineral properties, with a primary emphasis on gold and copper. The company has a portfolio of projects located in Alaska and British Columbia, Canada. The Donlin Gold project is the flagship project of the company, which is expected to contain 39 million ounces of gold, translating into a value of $80 billion at the current market price.
Here’s what Old West Management said about NovaGold Resources Inc. (NYSE:NG) in its Q4 2022 investor letter:
“The previous two mining companies are industry leaders with solid production. The next two companies have no production or revenue but are sitting on huge deposits. We were initially attracted to NovaGold Resources Inc. (NYSE:NG) because of the track record of success of company chairman and largest shareholder Thomas Kaplan. Kaplan has become a billionaire investing in silver and platinum mines in Bolivia and South Africa. Besides his investing in mining, he owns the world’s largest collection of Rembrandt’s works.
Novagold is co-owner of the Donlin mine in Alaska, along with Barrick Gold. The Donlin mine is on track to be one of the world’s largest gold mines with 39 million ounces of measured and indicated reserves with an average grade of 2.24 grams of gold per ton. A major hurdle is Donlin is located in a remote area of Alaska, and the estimated cost to bring the mine to production is $7.4 billion. That is a huge expense but at today’s gold price the mine has gross revenue potential of $72 billion. Obviously the higher the gold price goes the easier the decision to begin construction. The U.S. government is supportive of the project as are the local Alaska Native stakeholders. Novagold has $120 million of long term debt offset by $142 million of cash. The market cap is $2.2 billion, and the company is burning $11 million of cash per year. It is widely expected that Barrick, who is always looking to buy high quality assets, will purchase Novagold’s 50% interest in the world class Donlin mine.”
2. BrightSphere Investment Group Inc. (NYSE:BSIG)
Number of Hedge Fund Holders: 24
John Paulson’s Paulson & Co.’s Holdings: $211,043,853
Percentage of John Paulson’s Paulson & Co.’s Portfolio: 17.54%
BrightSphere Investment Group Inc. (NYSE:BSIG), formerly known as OM Asset Management, is a Boston, Massachusetts-based asset management company that provides investment management services to institutional and individual investors. The company offers a range of investment strategies across various asset classes, including equities, fixed income, and alternative investments. BrightSphere Investment Group Inc. (NYSE:BSIG) posted better-than-expected Q1 2023 results on May 4. Although revenue decreased by 18.2% YoY to $91.8 million, BrightSphere Investment Group Inc. (NYSE:BSIG) outperformed the consensus forecast of $81.9 million. Meanwhile, EPS was posted at 28 cents, which was one cent higher than the analysts’ forecast.
Here’s what Third Avenue Management said about BrightSphere Investment Group Inc. (NYSE:BSIG) in its Q4 2022 investor letter:
“BrightSphere Investment Group Inc. (NYSE:BSIG), and Cal Maine Foods were eliminated. BrightSphere and Cal Maine were both prototypical time-arbitrage/special situation investments. At the time of original purchase, asset manager, BrightSphere was undergoing a transformation leading to a series of asset sales in 2021. A large portion of the proceeds were returned via a tender offer in December 2021. After shares rose roughly 25% in the fourth quarter, the remaining position was monetized to redeploy into other more attractive securities. Egg producer, Cal Maine, was purchased during the depths of Covid at a deeply discounted valuation. As inflation grips the economy, Cal Maine has benefitted from consumers flocking to cheap sources of protein. In addition, an outbreak of bird flu in the US has disrupted supply. Fortunately, Cal Maine’s flock was spared from bird flu and the company was able to benefit from higher prices without experiencing supply disruptions. Cal Maine’s share price rose 70% in 2022 reaching a valuation meaningfully above our estimate of net asset value. Like BrightSphere, the position was eliminated to raise capital for better opportunities. Selling is not a decision Fund Management takes lightly. The time-arbitrage/ special situation bucket is comprised of companies where the thesis is dependent on an event of change in cycle dynamics. In both cases, the thesis played out as expected and given the valuation improvement, the securities were no longer a good fit for the portfolio.”
1. Bausch Health Companies Inc. (NYSE:BHC)
Number of Hedge Fund Holders: 41
John Paulson’s Paulson & Co.’s Holdings: $214,156,184
Percentage of John Paulson’s Paulson & Co.’s Portfolio: 17.8%
Bausch Health Companies Inc. (NYSE:BHC), formerly known as Valeant Pharmaceuticals International Inc., is a Laval, Canada-based pharmaceutical company that focuses on the development, manufacturing, and marketing of a wide range of healthcare products. The company, with a presence in over 100 countries, received a favourable ruling from the US District Court of Delaware regarding the patent exclusivity of Xifaxan. The judgment has stopped the US Food and Drug Administration (FDA) from accepting the abbreviated new drug application (ANDA) for Xifaxan before October 2029.
Of the 943 hedge funds tracked by Insider Monkey at the end of Q4 2022, Bausch Health Companies Inc. (NYSE:BHC) was held by 41 hedge funds.
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