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John Paulson Reduces Synergy Pharmaceuticals After Heavy 3rd Quarter Health Care Selling

- By Holly LaFon

John Paulson (Trades, Portfolio) axed another health care position on Nov. 30, he reported Tuesday, after backtracking on his huge exposure to the sector in the third quarter.


Paulson, who rose to fame after a short bet on the subprime mortgage bubble in 2007, decreased his position in Synergy Pharmaceuticals (SGYP) by 71.3%, leaving him with 4.4 million shares. Previously, on Nov. 10, he had reduced the position by 36.4% to 15.3 million shares.

The sale also trims his holding of the company to 1.78% from 6.81%.

In July, Paulson"s $19 billion hedge fund Paulson & Co. decided to shutter its health care-based long-short equity fund after two years after a steep drop in assets, Bloomberg reported.

"We are re-focusing the funds on our core areas of expertise in merger arbitrage and distressed credit, where our assets have been growing," said in a letter to investors, according to Bloomberg. "We thank the long-short team for their efforts on behalf of the company."

Paulson"s long equity portfolio for the third quarter shows he sold 31 of his 46 positions in health care and pharmaceuticals, keeping intact his top three: Shire (SHPG), Mylan NV (MYL) and Allergan Plc (AGN). In the second and third quarters, Synergy Pharmaceuticals was his seventh largest position, making it one of his biggest health care sales.

Synergy Pharmaceuticals is a biopharmaceutical company that develops treatments for gastrointestinal ailments, with one commercial product called Trulance and one lead product candidate named dolcanatide. Year to date, its share price tumbled 69% to $1.91 per share Tuesday afternoon.

For the third quarter, Synergy Pharmaceuticals sales grew to $5.0 million, a 117.4% increase from the comparable 2016 quarter. The company also reported a net loss of $48.9 million, or 22 cents per share, compared to a net loss of $40.2 million and 22 cents per share. It ended the quarter with cash on its balance sheet of $117.8 million and long-term debt of $97.977 million.

Total monthly prescription volume of Trulance has increased 98% on average each month, reaching 37,772 prescriptions written as of September.

See John Paulson (Trades, Portfolio)"s portfolio here.

This article first appeared on GuruFocus.