John Paulson’s Best Performing Stocks
Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
John Paulson has had some sub-prime ups and Chinese fraud downs, but the past few months have been good for Pauly. Some of his investments have performed exceptionally well.
Paulson initiated a position in Quest Software Inc. (NASDAQ: QSFT) back in Q1 with an average price of about $20. Quest deals in the management of databases and has been in the news quite frequently as of late. Following an agreement to join forces with Insight Venture Partners and become a private company, Dell decided to make an offer for Quest Software...and then a bigger offer. Quest did have a small setback after acquiring BlueFolder this year, but the share price managed to turn around in under a month. Currently sitting at +23.83% for the past year, with a +40% change from John's average purchase price, I think we can say Mr. Paulson is pleased with this investment.
Another Q1 purchase was Tennessee’s so-called friendliest hospitality and entertainment company, Gaylord Entertainment Co. (NYSE: RHP). After their 2011 Q3 earnings, Gaylord Entertainment hit their 52-week low and have seen a steady incline since. With great Q4 2011 and Q1 2012 earnings, Gaylord kicked the stock up even a notch further. Up 28.65% overall for the past year and running in at 38% above Paulson's average purchase price, it definitely makes his current top 4 stocks.
Paulson has also bought shares in AboveNet Inc. (NYSE: ABVT) in Q1...he had a lot of cash to spend at the beginning of the year. AboveNet is a fiber optic connections and network service across the US and the UK. After a share repurchase agreement announced in December, the stock steadily climbed until it shot up due to an offer from Zayo Group LLC in March. Of course Paulson knew to buy the stock before the offer and has enjoyed a +28% gain over his average purchase price. It must be easy.
Prestige Brands Holdings, Inc. (NYSE: PBH) was also a decent Q1 buy for Paulson. It's been quite the rocky road for this stock in the past few months due to a pending takeover by Gennoma Internacional and then a dumping by Gennoma Internacional. Well, of course, Paulson still made some cash. He bought at an average price of $13.66 and the stock has slowly made it back to about $16.
With all these investments proving profitable we can only wonder what Paulson will do now… probably try to make even more money. He has been playing the mergers lately and somehow buys right before the offers. The question now is whether the stocks will jump even higher? With QSFT and ABVT trading right at their respective offer prices there is not much to gain from the merger arbitrage. Will there be additional offers? Where is Paulson looking now?
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