John Paulson, the billionaire hedge fund manager battered by the selloff in gold, pared stakes in gold miners last quarter while adding shares of companies that stand to benefit from a stronger economy.
Paulson & Co., which manages $18 billion out of New York, exited its $32 million stake in Barrick Gold Corp., the world’s biggest gold producer by sales, and reduced holdings in other mining companies, according to a regulatory filing yesterday. The firm bought a $295.3 million stake in Family Dollar Stores Inc., $192.9 million in Hess Corp. shares, and a $44.2 million stake in Citigroup Inc.
Paulson & Co. also added to its stakes in takeover targets Sprint Nextel Corp. and Life Technologies Corp., which together earned the firm between $650 million and $700 million this year. Paulson has done well investing in companies undergoing mergers or restructurings, a strategy where he got his start as trader. Yet his big bets in the past two years on macroeconomic developments, such as his wager on gold, have undermined that performance.
The firm’s Gold Fund, its smallest at about $500 million and comprised mostly of Paulson’s own money, fell 47 percent this year through April, the month during which the metal had its biggest two-day decline since January 1980.
The firm last quarter sold 37,004 shares in NovaGold Resources Inc., 11,852 American Depositary Receipts in Gold Fields Ltd., 17,988 shares in Iamgold Corp., 4,310 shares of Randgold Resources Ltd. and 4,720 shares in Agnico Eagle Mines Ltd. The combined value of Paulson’s holdings in those miners dropped by $92.7 million, according to the filing with the U.S. Securities and Exchange Commission.
“We believe gold is taking a pause in a long-term upward trend,” the firm said in an e-mailed statement. “While inflation has been slow to materialize, continued global central bank printing will drive demand for gold as an alternative currency to paper currencies.”
Paulson & Co. bought 1.63 million shares of Sibanye Gold Ltd., valued at $9.22 million, and added 50,950 ADRs of AngloGold Ashanti Ltd., of which it is the largest shareholder. Its AngloGold stake still declined by $219.4 million from the previous quarter, to $665.4 million, as the stock slumped 25 percent in the first three months of the year.
Paulson & Co.’s stake in the SPDR Gold Trust exchange- traded fund, of which it is also the largest holder, remained unchanged last quarter. The firm uses the ETF to back the gold share classes of its funds. Investors can choose between dollar- and gold-denominated shares of most of the firm’s funds.