Paulson Triples Stakes in Endo, Akorn as Other Hedge Funds Sell

  • Billionaire manager sees ‘deeply oversold’ health-care stocks
  • Firm established Alexion, Baxalta positions in first quarter

Paulson & Co., the firm led by billionaire John Paulson, tripled its stakes in Endo International Plc and Akorn Inc. in the first quarter, sticking to big-name health-care wagers even as many other hedge funds ran the opposite way.

The firm increased its stake in Endo by 6.22 million shares, bringing the value of its holding to $268 million as of March 31, according to a filing Monday with the U.S. Securities and Exchange Commission. Brahman Capital, Soros Fund Management and Blue Ridge Capital sold out of their stakes. The drugmaker, led by former Valeant Pharmaceuticals International Inc. executive Rajiv De Silva, has faced scrutiny over its use of acquisitions and leverage to grow.

Paulson also built its stake in Akorn, a maker of generic eye-care products. With 9.32 million shares worth $219 million at the end of the quarter, the hedge fund is now Akorn’s second-largest holder.

Losses on health-care stocks over the past few quarters are one reason why Paulson’s assets under management have shrunk to about $13 billion from a peak of $38 billion in 2011. The value the New York-based firm’s reported U.S.-listed stock holdings declined by almost a fifth to $13.4 billion during the first quarter.

‘Deeply Oversold’

“Specialty pharmaceutical names are deeply oversold and we believe there is significant upside from this point onwards,” Armel Leslie, a spokesman for Paulson & Co. with Peppercomm, said in an e-mailed statement.

Paulson established new positions in Alexion Pharmaceuticals Inc., Universal Health Services Inc. and Baxalta Inc., according to the filing.

Paulson founded the hedge fund, which mainly focuses on wagers around corporate events like mergers and acquisitions, in 1994. The firm has had choppy performance since it made $15 billion in 2007 betting against mortgage bonds.

Money managers who oversee more than $100 million in U.S. equities must file a Form 13F within 45 days of the end of each quarter to list their holdings in stocks that trade on U.S. exchanges, as well as options and convertible debt. The filings don’t show non-U.S. traded securities or wagers against stocks.

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