Paulson Buys Sprint, MetroPCS in Telecom Takeover PlaysKelly Bit
John Paulson, the billionaire hedge-fund manager who has vowed to return to his roots in event-driven investing after two years of losses in some funds, bought shares of Sprint Nextel Corp. and added to his MetroPCS Communications Inc. stake, two companies involved in takeovers.
Paulson & Co., based in New York, bought 127.7 million shares of Sprint last quarter, the firm’s largest new purchase in the period, according to a filing yesterday with the U.S. Securities and Exchange Commission. Softbank Corp., the Japanese mobile carrier, is seeking to buy Sprint for $20 billion to expand into the U.S.
Paulson added 8 million shares of MetroPCS in the fourth quarter. Paulson & Co., the biggest shareholder of MetroPCS, said the wireless company’s planned combination with Deutsche Telekom AG’s T-Mobile USA unit would take on too much debt, echoing investor Peter Schoenfeld, who is recruiting allies for a fight with the German phone company over the MetroPCS takeover.
Paulson has told clients he’s focusing on event-driven investing this year after losses on wrong-way bets on the U.S. and European economies over the previous two years left the firm with with $18 billion in assets, down from a peak of $38 billion in 2011. Event-driven managers bet on companies facing mergers, spinoffs and bankruptcies.
Armel Leslie, a spokesman for Paulson & Co., declined to comment on the filing.
Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
P. Schoenfeld Asset Management’s arguments against the MetroPCS transaction “make a lot of sense,” Paulson said in an e-mailed statement. Paulson is withholding its decision on whether to vote for the deal until it sees the final proxy statement, it said.
The new company “has too much debt, the interest rate on Deutsche Telekom’s debt financing is too high, and the exchange ratio is too low for PCS stockholders,” Paulson said. “It may be more prudent for PCS to remain independent and explore other higher value alternatives.”
Paulson’s oldest strategy is merger-arbitrage, which he started trading in 1994, according to a letter to investors.