Complete Paulson Q1 Portfolio Update: Major Additions To Gold Exposure, New Casino Stakes, But What About CDS And Gamma?

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Mon, 05/17/2010 - 21:15 | 357402 Nigaz
Nigaz's picture

Stock to own?  CIT...

Added by Paulson and Einhorn, sold by Icahn.  Is there a better indicator out there?

Let the garbage meltup continue.

Tue, 05/18/2010 - 00:27 | 357622 Assetman
Assetman's picture

Well... John Thain does have that "$hit Don't $tink" persona..

Mon, 05/17/2010 - 21:16 | 357405 johngaltfla
johngaltfla's picture

Beazer? Is he nuts or is he anticipating an acquisition..hmmmmm....

Mon, 05/17/2010 - 21:37 | 357427 AccreditedEYE
AccreditedEYE's picture

That has to be it. Long term, the home buyer demographic is getting put on long term neutral do to their defaults. (both default by necessity and default by choice) Boomer retirement is also a drag. Can't see where demand will come from... I've also heard of some Homies shopping around the globe for $$$.

Mon, 05/17/2010 - 23:19 | 357564 whatsinaname
whatsinaname's picture

he has been touting a housing recovery lately (especially in cali). I suspect he is secretly shorting CDOs again..

Tue, 05/18/2010 - 11:09 | 358089 MyFriendMises
MyFriendMises's picture

Beezer up almost 10% on Citi upgrade to Buy. 

Mon, 05/17/2010 - 21:17 | 357407 living on the edge
living on the edge's picture

GLD? I guess Paulson knows something we don't know. Or does he?????

Mon, 05/17/2010 - 21:19 | 357410 Raymond K Hassel
Raymond K Hassel's picture

Paulson has redemption rights - we don't

Tue, 05/18/2010 - 03:40 | 357689 Gordon_Gekko
Gordon_Gekko's picture

And I'm sure he has at least his stuff audited himself. Perhaps the GLD promoters needed a celebrity investor to sell the GLD fraud to the gullible public ala the Goldman-Buffett unholy alliance. I'm sure there must be hidden kicker (like, say, interest payable in Gold) to attract Paulson to "invest" in this shitpile.

Mon, 05/17/2010 - 21:29 | 357421 thesapein
thesapein's picture

Paulson has been long gold for at least year, right, so no surprise there. This is the same Paulson that worked with a Goldman Sachs crew to create shorts for the housing bubble. 

Tue, 05/18/2010 - 07:34 | 357756 Samsonov
Samsonov's picture

A GLD vs. physical position provides insight into the investor.  Anyone buying GLD values liquidity, indicating the intention to speculate on short-term trends, while discounting the possibility of major dislocation.  Buyers of physical form a totally separate market, one willing to sacrifice liquidity, take on acquisition and storage costs, and assume risk of possession in anticipation of major dislocation.  We can therefore know Paulson believes in the system; if you do too, then emulating his actions is probably a good move.

Tue, 05/18/2010 - 10:59 | 358062 FEDbuster
Mon, 05/17/2010 - 21:21 | 357412 Raymond K Hassel
Raymond K Hassel's picture

Classic bet on Reflation to win, place and show. 

Mon, 05/17/2010 - 21:26 | 357418 Raymond K Hassel
Raymond K Hassel's picture

Or Reflation to win, Masturflation to place, and Hyperinflation to eventually show?

Mon, 05/17/2010 - 21:24 | 357416 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Leo, (pointing) the big guys, look at what they are doing.

Mon, 05/17/2010 - 21:36 | 357425 I am a Man I am...
I am a Man I am Forty's picture

Hope he is selling financials.  That ship has sailed.

Mon, 05/17/2010 - 21:40 | 357433 chindit13
chindit13's picture

We've never had a major hedge fund manager go from hero to goat.  Some have had a few good years, then frittered away the gains until they closed shop.  Perhaps we are due for one to remind all that, in large part, trading success has a very large element of luck.  Yes, there's research, and discipline, and money management, but if the markets have taught us anything in the last few years it is that research and logic can, at times, be of absolutely no value whatsoever.

Another major HF manager, though I cannot recall which one at the moment, once said that eventually the markets discredit everybody.  Paulson, when he still had Pellegrini with him, came out of nowhere to become---as ZH demonstrates here---the prime focus among the HF community.  David Tepper beat Paulson's record for one year take home, but he has slipped beneath the headlines again, putting the bright lights back on Paulson.

40% of this list is in major banks and financials.  That is a rather large bet, even relative to S&P weighting.  Paulson has more faith in Bernanke and Geithner than most people do in their chosen god.  For that brief moment in time on 6 May, what was this portfolio "worth"?  If the market bid disappears again, how likely is it that Paulson can escape from $3 billion of BAC, $2 billion of C, $1.5 billion of STI and COF, a half billion of WFC, etc.?

Could he be the one that goes out as spectacularly as he came on the scene?

Mon, 05/17/2010 - 21:47 | 357442 Nigaz
Nigaz's picture

No, he is TCTF.

Mon, 05/17/2010 - 21:53 | 357453 Apostate
Apostate's picture

It's possible.

I have no idea what his trading strategy is. Is he just a seat-of-the-pants type of guy? Or is there a methodology?

Making the correct calls and having the wherewithal to structure special deals is impressive, but we're also living in absurd times.

My instinct is that many hedgies are going to be wiped out. The UK has just proposed a 50% capital gains tax that (ought) to cause most funds to either liquidate or seek safe haven elsewhere.

I doubt the US will be quite so crazy, but you never know. The tea party people may just elect some kind of Mugabe-style lunatic that would do things like impose such confiscatory taxes.

Tue, 05/18/2010 - 00:19 | 357616 chindit13
chindit13's picture

A large number of folks, HF's and regular non-value-added funds, have bet the ranch on the continued ability of the Bernanke-Geithner-Obama Axis of Evil to continue to manipulate and rig the markets in favor of the least deserving members of our society....er...species.  In the event democracy actually rears its ugly head again in that oligopoly known as the United States, that is going to be a very bad place to be positioned.  It's a sure thing, until it's not.

By the way, cannot imagine why you got junked.  Hope you post more, because I would like to hear more of your views, considering your background.

Tue, 05/18/2010 - 00:30 | 357624 Apostate
Apostate's picture

I can take a little junk. I've taken plenty of hits in my life so far.

As we can see from the Tories, populist uprising doesn't necessarily result in sane policies. It just results in a different set of crazies in power.

There's no way that the deficit can be closed by conventional means. There are also major political issues involved in dealing with the Federal debt (in regards to China).

I'm critical about the Tea Party because of the people that I've met through it. They seem to be unprincipled to the extreme. I can tolerate (and even like - sometimes very much) Ron Paul type people. But I dislike it when these politicians raise money from poor people and the young in promising them something better than what we already have.

They spend all their time focusing on these political issues instead of on improving their economic conditions.

The people that normally appear to be powerful or skilled at running the political system are actually turning out to be completely powerless in the face of these systemic issues. It may take generations to engender a superior society.

There are no quick fixes. There are no political solutions to this. There's no magic piece of legislation that will suddenly wave away all the evil in the world.

Tue, 05/18/2010 - 10:14 | 357963 Cheeky Bastard
Cheeky Bastard's picture

HF are re-locating to Geneva. Believe me from a personal experience; they are paying for homes, office space and entire buildings 20% above what they are worth. Geneva is and will for ever be a cosmic center of shadow, discrete and arcane forms of financial services. The other one is Zug.

Mon, 05/17/2010 - 21:59 | 357460 thesapein
thesapein's picture

Is he betting, maybe, that banking will be nationalized?

Mon, 05/17/2010 - 22:05 | 357467 Raymond K Hassel
Raymond K Hassel's picture

I thought late trading was illegal now?

Mon, 05/17/2010 - 22:05 | 357468 AccreditedEYE
AccreditedEYE's picture

Would you gamble 40% of your portfolio to let the government be the final arbiter of your closing price?

Mon, 05/17/2010 - 22:07 | 357469 Raymond K Hassel
Raymond K Hassel's picture

If I was assured there would be no real regime change in the interim?  Possibly. 

Mon, 05/17/2010 - 22:19 | 357483 Apostate
Apostate's picture

It's possible that he and his staff have no concept of political risk. I'm not sure. I've only read a few profiles of Paulson, and have no personal connection to his circle. 

Mon, 05/17/2010 - 22:19 | 357484 Apostate
Apostate's picture

It's possible that he and his staff have no concept of political risk. I'm not sure. I've only read a few profiles of Paulson, and have no personal connection to his circle. 

Mon, 05/17/2010 - 22:07 | 357470 Matto
Matto's picture

Doubtless long financials was still a good idea going into the end of March.

Not so rosey now though. If only we could get a real time peak at this portfolio now...

Tue, 05/18/2010 - 00:31 | 357625 Assetman
Assetman's picture

No offense to Mr. Paulson, but I'd rather follow what Paolo Pellegrini is doing with his money.

Tue, 05/18/2010 - 03:42 | 357690 Gordon_Gekko
Gordon_Gekko's picture

Totally.

Tue, 05/18/2010 - 11:26 | 358146 velobabe
velobabe's picture

Pellegrini, who is 6 feet 2 inches (188 centimeters) tall and weighs 190 pounds (86 kilograms), is a former jazz disc jockey with some unconventional views on how to fix global finance.

Many nights, he volunteered as a disc jockey at Milan’s Radio Radicale, spinning vinyl by bebop greats Dizzy Gillespie and Charlie Parker.

 

god, men are great†

Tue, 05/18/2010 - 12:21 | 358292 Assetman
Assetman's picture

I love your use of asterisks.

It makes me tingle.

Pellegrini is certainly a different bird, though...

Tue, 05/18/2010 - 13:44 | 358526 velobabe
velobabe's picture

ø     ø

    ‡

…,…,…

Tue, 05/18/2010 - 20:26 | 359475 velobabe
velobabe's picture

  £   £

     ¡

¨…,…¨

 

this one is for you cheeky, pound it†

Tue, 05/18/2010 - 20:30 | 359483 velobabe
velobabe's picture

  ¥    ¥

     §

«»……«»

or my residing asian friends, if i still have any†

Tue, 05/18/2010 - 20:34 | 359489 velobabe
velobabe's picture

   ¢   ¢

      ¿

…¸¸¸¸…

 

obviously, for the american cent-less†

Tue, 05/18/2010 - 20:47 | 359501 velobabe
velobabe's picture

   §     §

      ®

ˆˆˆ îiˆˆˆ

fuck, seeing the section sign way to much lately†

kind of has an american indian feel, don't you think?

i see blankets, wild west.

                ...hey wouldn't it be fun, if i could put my smiley faces on top of my chest!

bye bye

Tue, 05/18/2010 - 20:53 | 359525 velobabe
velobabe's picture

fuck, all of you global world clock people.

wouldn't you rather wake up to some of my faces, might be speculating here, but to the alternate?

i actually wake up to the birds singing, sets the stage for a nice day.

if they go........i go.

plus last question, whose time stamp, do i see when you post {outside USofA, only please}

my time or your time?

Tue, 05/18/2010 - 22:26 | 359737 velobabe
velobabe's picture

in honor of the giro d'italia maglia rosa

i changed my v neck to the pink rosa†

does anybody have a magnifying glass†

 

Tyler Farrar (Garmin - Transitions) outsprinted Fabio Sabatini (Liquigas - Doimo) for victory in stage 10. Farrar's teammate and lead-out man Julian...

Tue, 05/18/2010 - 22:56 | 359810 velobabe
velobabe's picture

G U E S S   W H A T

fuck yourself†

Wed, 05/19/2010 - 02:34 | 360127 Assetman
Assetman's picture

ROFL!  I... can't... feel... my... legs!

Sun, 05/30/2010 - 13:29 | 360282 velobabe
velobabe's picture

Mon, 05/17/2010 - 22:23 | 357488 credittrader
credittrader's picture

FWIW, that 40mm shares of MGM looks very interesting to me...quick and simple beta between MGM stock and CDS during 3-6 months Q4 09-Q1 10 and you see 120x ish...With CDS trading at ~800bps, that's a DV01 around say $3300 / $10mm notional (again give or take)...so I suggest (ever so humbly) that Mr. Paulson has bought $1bn notional credit protection (short credit)  [Math:- 40mm shares / 120x = 333,333. Then to get to that DV01 we need 100x$10mm or $1bn notional protection] - arb guys, ignore the crude math for now. So he buys 40mm MGM shares and Buys $1bn Credit protection to be 'approximately instantaneously empirically (lots of caveats) MtM hedged.

BUT...a quick optical at the charts of MGM CDS vs Stock and you see CDS got pretty rich (tight) relative to stocks during that quarter as all the craziness of reach-for-yield (and its own fundamentals played in) and so while he is 'hedged', he is looking to take advantage of the potential mispricing....

AND...even better, should MGM go tits-up - and we have to assume recovery is gonna be ugly, he gets paid say $700mm (30% recovery) on the CDS and loses say $480mm (or whatever he paid for it, which is likely less)...

SO..instead of being a fully bullish bet on MGM (he is huge long MGM stock and it will do the rounds on StockTwits tomorrow), he is actually hoping for a huge bearish ending [DEFAULT] and in the meantime, showing his huge Stock holding in MGM gets the momo boys and coat-tail hanger-onners to pull his arb into a nice PnL position in the meantime (coz technical buying pressure in stocks will outweigh any supply of protection in CDS)...

Just thinking out loud

Mon, 05/17/2010 - 22:30 | 357497 Tyler Durden
Tyler Durden's picture

So you mean JP would indicate a long equity position only to be short higher in the stack (and grateful that short credit positions will likely not have to be reported for at least 2-3 years)? Or that he makes 15% in a reflation and 50% in a full collapse. Never happen. Just ask ACA.

Tue, 05/18/2010 - 10:21 | 357974 Cheeky Bastard
Cheeky Bastard's picture

He is betting on either LBO or M&A. Thats his thang; thats what he is specialized in and what the structure of his fund is [look it up, JP&A is a M&A fund]. He is going long not to deceive the market, but purely based on the belief MGM will be bought.

Mon, 05/17/2010 - 22:35 | 357507 FEDbuster
FEDbuster's picture

I would be willing to chip in a $1. to send Paulson a Zerohedge "Gold, Bitches" coffee mug, but only if he agrees to send Tyler a picture of him using it.

Mon, 05/17/2010 - 22:47 | 357520 dumpster
dumpster's picture

dumpster portfolo update

 

5 shares   rgld

2 SHARES   gg

2 shares apple

4.50 in cash

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