Paulson's Big Drug Stocks Spur $2.3 Billion in Investor Pain

Fed Chairman Bernanke At Economic Club Of NY

John Paulson.

Photographer: Scott Eells/Bloomberg
  • Five biggest holdings tumbled in selloff of pharmaceuticals
  • Allergan, Shire, Valeant, Teva, Mylan were 40% of holdings

Drug stocks are causing plenty of pain for John Paulson.

The billionaire hedge fund manager’s five largest holdings -- all of them drug stocks -- have lost more than a combined $2.3 billion in value this year, according to data compiled by Bloomberg from the most recent regulatory filings. They represented more than 40 percent of his $16.7 billion portfolio as of Dec. 31, filings show.

The stocks -- Allergan Plc, Shire Plc, Valeant Pharmaceuticals International Inc., Teva Pharmaceutical Industries Ltd, and Mylan NV -- have slid from 15 percent to 69 percent this year. Drugmakers are falling amid political scrutiny of high prices. The S&P 500 Pharmaceuticals, Biotechnology and Life Sciences Index is down 14 percent since reaching a one-year high in July.

Each of Paulson’s five drug holdings fell Friday in a selloff triggered by a disappointing forecast from painkiller maker Endo International Plc. Paulson holds Endo.

The $2.3 billion loss figure assumes Paulson still owns the same number of shares in each company that he had as of Dec. 31.

Paulson has struggled with uneven returns since his windfall wager against U.S. housing in 2007. Last year he pledged his personal investments in four of his hedge funds as additional collateral for his firm’s borrowings, after investment losses and client defections cut his assets under management.

Paulson & Co’s Advantage and Advantage Plus funds, which wager on companies going through corporate events including spinoffs and bankruptcies, tumbled 15 percent in the first quarter, according to a person familiar with the matter.

Armel Leslie, a Paulson spokesman at Peppercomm, didn’t immediately return a phone call and e-mail for comment.

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