Hedge fund superstar John Paulson was most recently in the news as the man 'on the other side' of the allegedly questionable Goldman Sachs (NYSE:GS) CDO deal that is currently before the courts. And while Mr. Paulson hasn't been charged with any wrongdoing in the affair, not a few market watchers have begun to look askance at the trader's modus operandi. (Learn more about hedge funds, see: A Brief History Of The Hedge Fund.)
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But whether you approve of Paulson & Company's workings may be beside the point. If you're invested with him, you're no doubt happy. In October of 2007, when the Dow Jones Industrial Average was setting all time highs above 14,000, Paulson's fund had a net asset value of some $7.7 billion.
Since then, as we all know, the Dow has dropped 30%, as measured by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA). Yet Paulson's fund has grown by a tremendous 175% and was worth $21.2 billion at last quarterly report in March of this year. The fund's growth occurred during what is commonly figured to be one of the worst market downturns in the last hundred years.
Yet how he did it may be less important than what he's doing now. Below, we highlight some of John Paulson's current stock holdings.
Lover of Financials
Paulson's portfolio is very heavily weighted in the financials, with significant holdings in the basic materials sector also. At last report, financials accounted for 43% of the portfolio, and just two stocks comprise the bulk of that bet.
The fund's biggest bank holding is Bank of America Corp. (NYSE:BAC), of which Paulson holds nearly 168 million shares worth just under $3 billion (14% of the fund's total portfolio). BAC stock has grown just over 29% in the last twelve months but has struggled in 2010, rising less than 2% since New Year's.
Paulson's other major financial holding is Citigroup Inc. (NYSE:C). The fund holds over $2 billion of it. The shares comprise just under 10% of the total portfolio. Citigroup shares are up 10% in a year.
But the biggest of Paulson's holdings is in the SPDR Gold Trust ETF (NYSE:GLD), to which he has allotted 16% of the fund, or $3.4 billion. GLD is up 12% for the year.
The Bottom Line
John Paulson's record over the last three years makes him a name worth watching. And if his big bets are correct, look for a whale of a bull market - and not a little inflation ahead.
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