When it comes to investing in health care, hedge fund pro John Paulson knows his stuff.
In June 2015, his Paulson & Co. announced that it was starting a fund focusing on health care, pharmaceutical and related technology and consumer companies. In a letter obtained by Bloomberg, Paulson said the fund would start with $500 million and be led by Guy Levy, whose talent and expertise in the arena he said "have added significantly to our performance over the past five years." He added that the maneuver was representative of the "natural evolution" of the firm.
Since launching Paulson & Co. in 1994, Paulson has found his sweet spot in event-driven arbitrage strategies related to mergers, bankruptcies and other corporate events.
However, the health industry has been a point of focus as well. In 2014, for example, Paulson pushed for Botox-maker Allergan (AGN) - Get Allergan plc Report to consider merging with Shire (SHPG) - Get Shire PLC Sponsored ADR Report after a potential $54 billion deal between Shire and AbbVie (ABBV) - Get AbbVie Inc. Reportfell through.
Paulson's latest 13F filing, corresponding to June 30, also evidences his penchant for the health care sector. Four of his top five holdings are health care stocks.
Here are the five health care stocks Paulson is betting on most as of the end of the second quarter of 2016.
Shire, a biopharmaceutical company, together with its subsidiaries, researches, develops, licenses, manufactures, markets, distributes and sells pharmaceutical products. It has a $57.2 billion market cap and trades at a P/E of 51.82.
Shire completed its $32 billion acquisition of Baxalta in June.
Mylan, through its subsidiaries, develops, licenses, manufactures, markets and distributes generic, branded generic and specialty pharmaceuticals worldwide. It has a $23 billion market cap and trades at a P/E of 26.9.
The company has recently been embroiled in controversy over the pricing of its EpiPen device.
Allergan, a specialty pharmaceutical company, develops, manufactures, markets and distributes medical aesthetics, generic, branded generic, biosimilar and over-the-counter pharmaceutical products worldwide. It has a market cap $94.2 billion and trades at a P/E of 19.2.
During the second quarter, the Treasury Department passed new rules to curb inversions specifically targeted at an impending $160 billion merger between Allergan and Pfizer (PFE) - Get Pfizer Inc. Report , effectively killing the deal.
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Teva Pharmaceutical Industries
Teva Pharmaceutical Industries (TEVA) - Get Teva Pharmaceutical Industries Limited American Depositary Shares Report is Paulson's No. 4 holding as of the end of the second quarter. He owns 16.8 million shares worth $842.5 million.
Teva develops, manufactures, markets and distributes generic medicines and a portfolio of specialty medicines worldwide. The company operates in two segments: generic medicines and special medicines. It has a $47.1 billion market cap and trades at a P/E of 28.3.
Teva recently acquired Allergan's global generics business.
Mallinckrodt (MNK) - Get Mallinckrodt Plc Report is Paulson's seventh-largest holding as of the end of the second quarter and his No. 5 health care pick. He owns 8.4 million shares valued at $508.8 million as of June 30.
Mallinckrodt, along with its subsidiaries, operates in a specialty biopharmaceutical and nuclear imaging business that develops, manufactures, markets and distributes specialty pharmaceutical and biopharmaceutical products and nuclear imaging agents. It has a $8.1 billion market cap and trades at a P/E of 16.3.