Paulson & Co. starts new positions in 3Q 2013 (Part 5 of 5)
Paulson & Co., founded in 1994 by John Paulson, is an investment management firm specializing in event-driven arbitrage strategies (including merger arbitrage, bankruptcy reorganizations, and distressed credit), structured credit, recapitalization, restructuring, and other corporate events. The firm operates as a partnership consisting of John Paulson and the other partners of the firm.
Paulson & Co. manages approximately $18 billion and employs approximately 120 employees in offices located in New York, London, and Hong Kong.
The firm started new positions in Time Warner Cable (TWC), Sprint Corp (S), Mallinckrodt Plc. (MNK), and FedEx Corp. (FDX) and sold positions in Mead Johnson Nutrition Co. (MJN) and Élan Corp Plc. (ELN).
Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).
Why sell Élan Corp Plc. (ELN)?
Élan Corp. (ELN) announced on 29 July, 2013, that OTC drugmaker Perrigo (PRGO), based in Allegan, Michigan, will acquire the company for $8.6 billion. The shareholders of Élan approved the deal this week. Élan had put itself up for sale in June after thwarting hostile bids from Royalty Pharma, a U.S. private equity group that invests in pharmaceutical and biotech royalties. In April, the company sold its 50% stake in Tysabri, its multiple-sclerosis blockbuster drug, to its U.S. development partner, Biogen Idec Inc. (BIIB). Élan received $3.25 billion in cash and will receive double-digit tiered royalty payments, on all indications, for Tysabri. For 3Q 2013, the company recorded revenues of $48.6 million, representing mainly the 12% royalty on in-market sales of Tysabri. A net loss for the quarter of $13.8 million was impacted by costs associated with the Perrigo transaction. The company said the acquisition is expected to complete by the end of the year.
Élan is a biotechnology company headquartered in Ireland. The company’s biopharmaceuticals unit engages in research, development, and commercial activities, and its EDT unit focuses on product development, scale-up, and manufacturing to address drug optimization challenges in the pharmaceutical industry.
According to its website, Paulson & Co. relies on bottom-up fundamental research within corporate events and sectors where it has expertise, and encourages teamwork by incentivizing collaboration and idea sharing. The flexibility of having long and short event exposure across the capital structure enables it to attempt to optimize performance across market cycles. In addition to its hedge funds, Paulson & Co. manages real estate private equity funds which focus on various types of distressed real estate recovery opportunities. Its goals are capital preservation, above average returns over the long-term, and low correlation to the markets.
Browse this series on Market Realist: