Paulson is now in stock dumping mode. Whether it is on a name by name basis or wholesale is unknown right now, and will need to wait until February 15 for confirmation, although we are confident that what Paulson & Co.'s 8 different funds/accounts are doing in Cheniere Energy (LNG) in the past 10 trading days is indicative of a broad based portfolio profit-taking, that has started on November 16 and is ongoing through today. As Paulson had a sizable stake in LNG, he was obliged to file 13D's. That is not the case in most of his other positions. And courtesy of the last two 13-D (here and here), we have a glimpse of what an active dump looks like for John Paulson. Between 7 different funds and separately managed accounts, Paulson has taken his stake in the firm from 7.5 million shares to just over 2.8 million. On the first day of the dump, Paulson sold 2 million shares, representing 20% of the ADV, as the VWAP algo was working overdrive. Subsequently, Paulson sold slightly less, averaging just under 500,000 shares a day, and representing less and less of the average daily volume, until we another volume pick up today, when the selling popped to a 4 day high. Altogether one fund's selling was responsible for 12.4% of the average volume in the stock in the past two business weeks. It seems Paulson believes he has overstayed his welcome in the LNG terminal operator, in which he built up an initial 4.7 million share stake in the June 30, 2008 quarter at around $5.50/share, and then buying another 2.8 million shares in the end of 2008 at a far lower price. Then as a result of the recent surge in the name, he has decided to bail. As noted earlier, we are confident this is not an isolated case of derisking, and is likely matched by many other Paulson positions, especially in winning names in which the billionaire is now locking in profits.
A Glimpse Of Paulson Dumping Stock: Fund's Sales Of LNG Accounts For 12.4% Of Last Ten Day ADV
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