10 Stocks Billionaire John Paulson Loves: DirecTV, AbbVie and More

 

 

 

NEW YORK (Stockpickr) -- At Stockpickr, we track the top holdings of a variety of high-profile investors, such as George Soros and Carl Icahn.

One of the most popular of these portfolios is that of Paulson & Co., run by John Paulson, No. 84 on Forbes' list of the world's billionaires.

Today we're taking a closer look at 10 stocks that Paulson bought in the most recently reported quarter, based on Paulson & Co.'s most recent quarterly 13F filing with the SEC, which reflects holdings as of Sept. 30, 2014. They are ordered by position size.

10. HCA Holdings

HCA Holdings (HCA) comprised 1.8% of Paulson & Co.'s portfolio as of Sept. 30. The 6.1 million-share position was a 78.4% increase over the previous quarter.

TheStreet Ratings team rates HCA Holdings as a buy with a ratings score of B-. TheStreet Ratings team has this to say about its recommendation:

"We rate HCA Holdings (HCA) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, revenue growth, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 46.83% and other important driving factors, this stock has surged by 37.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HCA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 41.9% when compared to the same quarter one year prior, rising from $365.00 million to $518.00 million.
  • HCA's revenue growth trails the industry average of 19.7%. Since the same quarter one year prior, revenues slightly increased by 9.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $1,128.00 million or 25.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.26%.
  • HCA Holdings has improved earnings per share by 46.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HCA Holdings reported lower earnings of $3.36 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $3.36).

You can view the full analysis from the report here: HCA Ratings Report

9. Equinix

Equinix (EQIX) comprised 1.9% of Paulson & Co.'s portfolio as of Sept. 30. The 2.2 million-share position was a 4.1% increase over the previous quarter.

TheStreet Ratings team rates Equinix as a buy with a ratings score of B. TheStreet Ratings team has this to say about its recommendation:

"We rate Equinix (EQIX) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EQIX's revenue growth trails the industry average of 28.8%. Since the same quarter one year prior, revenues rose by 14.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $216.44 million or 4.78% when compared to the same quarter last year. Despite an increase in cash flow, Equinix's cash flow growth rate is still lower than the industry average growth rate of 26.48%.
  • Equinix's earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, Equinix reported lower earnings of $1.84 versus $2.57 in the prior year. This year, the market expects an improvement in earnings ($2.83 versus $1.84).
  • The gross profit margin for Equinix is currently very high, coming in at 70.36%. Regardless of EQIX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EQIX's net profit margin of 6.90% is significantly lower than the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

You can view the full analysis from the report here: EQIX Ratings Report

8. Cobalt International Energy

Cobalt International Energy (CIE) comprised 2.4% of Paulson & Co.'s portfolio as of Sept. 30. The 41.9 million-share position was a 2.2% increase over the previous quarter.

There is no TheStreet Ratings data on this stock at this time.

7. Mylan

Mylan (MYL) comprised 2.4% of Paulson & Co.'s portfolio as of Sept. 30. The 12.5 million-share position was a 3% increase over the previous quarter.

TheStreet Ratings team rates Mylan as a buy with a ratings score of B+. TheStreet Ratings team has this to say about its recommendation:

"We rate Mylan (MYL) a buy. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 17.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Mylan reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Mylan increased its bottom line by earning $1.58 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($3.56 versus $1.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 214.1% when compared to the same quarter one year prior, rising from $158.91 million to $499.10 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Pharmaceuticals industry and the overall market, Mylan's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

You can view the full analysis from the report here: MYL Ratings Report

6. AbbVie

AbbVie (ABBV) comprised 3.1% of Paulson & Co.'s portfolio as of Sept. 30. The 13 million-share position was a new buy in the most recently reported quarter.

TheStreet Ratings team rates AbbVie as a buy with a ratings score of B-. TheStreet Ratings team has this to say about its recommendation:

"We rate AbbVie (ABBV) a buy. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, ABBV's share price has jumped by 25.50%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ABBV should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for AbbVie is currently very high, coming in at 82.25%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.08% trails the industry average.
  • AbbVie's earnings per share declined by 48.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AbbVie increased its bottom line by earning $2.56 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($3.29 versus $2.56).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, AbbVie's return on equity significantly exceeds that of both the industry average and the S&P 500.

You can view the full analysis from the report here: ABBV Ratings Report

5. Mallinckrodt

Mallinckrodt (MNK) comprised 3.4% of Paulson & Co.'s portfolio as of Sept. 30. The 9 million-share position was a 33.8% increase over the previous quarter.

TheStreet Ratings team rates Mallinckrodt as a hold with a ratings score of C. TheStreet Ratings team has this to say about its recommendation:

"We rate Mallinckrodt (MNK) a hOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 44.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, MNK's share price has jumped by 81.37%, exceeding the performance of the broader market during that same time frame. Although MNK had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Compared to other companies in the Pharmaceuticals industry and the overall market, Mallinckrodt's return on equity significantly trails that of both the industry average and the S&P 500.
  • Mallinckrodt has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Mallinckrodt swung to a loss, reporting -$3.57 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($6.69 versus -$3.57).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 1151.9% when compared to the same quarter one year ago, falling from $33.50 million to -$352.40 million.

You can view the full analysis from the report here: MNK Ratings Report

4. DirecTV

DirecTV (DTV) comprised 3.7% of Paulson & Co.'s portfolio as of Sept. 30. The 10.4 million-share position was a 4% increase over the previous quarter.

TheStreet Ratings team rates DirecTV as a hold with a ratings score of C+. TheStreet Ratings team has this to say about its recommendation:

"We rate DirecTV (DTV) a hold. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that net income has been generally deteriorating over time."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,662.00 million or 23.56% when compared to the same quarter last year. In addition, DirecTV has also modestly surpassed the industry average cash flow growth rate of 17.41%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • DirecTV's earnings per share declined by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DirecTV increased its bottom line by earning $5.19 versus $4.61 in the prior year. This year, the market expects an improvement in earnings ($5.94 versus $5.19).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has decreased by 12.6% when compared to the same quarter one year ago, dropping from $699.00 million to $611.00 million.

You can view the full analysis from the report here: DTV Ratings Report

3. Time Warner Cable

Time Warner Cable (TWC) comprised 4.4% of Paulson & Co.'s portfolio as of Sept. 30. The 7.3 million-share position was a 42.3% increase over the previous quarter.

TheStreet Ratings team rates Time Warner Cable as a buy with a ratings score of B+. TheStreet Ratings team has this to say about its recommendation:

"We rate Time Warner Cable (TWC) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,448.00 million or 19.76% when compared to the same quarter last year. In addition, Time Warner Cable has also modestly surpassed the industry average cash flow growth rate of 17.41%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 35.95% is the gross profit margin for Time Warner Cable which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.73% trails the industry average.

You can view the full analysis from the report here: TWC Ratings Report

2. Covidien

Covidien (COV) comprised 4.5% of Paulson & Co.'s portfolio as of Sept. 30. The 12.6 million-share position was a 79.9% increase over the previous quarter.

TheStreet Ratings team rates Covidien as a buy with a ratings score of A. TheStreet Ratings team has this to say about its recommendation:

"We rate Covidien (COV) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 43.03% and other important driving factors, this stock has surged by 47.05% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, COV should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Covidien has improved earnings per share by 43.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Covidien increased its bottom line by earning $3.64 versus $3.40 in the prior year. This year, the market expects an improvement in earnings ($4.33 versus $3.64).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 39.0% when compared to the same quarter one year prior, rising from $372.00 million to $517.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 6.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for Covidien is rather high; currently it is at 65.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.91% is above that of the industry average.

You can view the full analysis from the report here: COV Ratings Report

1. Shire

Shire (SHPG) comprised 9.7% of Paulson & Co.'s portfolio as of Sept. 30. The 9.1 million-share position was a 168.7% increase over the previous quarter.

TheStreet Ratings team rates Shire as a buy with a ratings score of B+. TheStreet Ratings team has this to say about its recommendation:

"We rate Shire (SHPG) a buy. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 31.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 66.24% and other important driving factors, this stock has surged by 43.92% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Shire reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Shire increased its bottom line by earning $7.37 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($10.63 versus $7.37).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 72.4% when compared to the same quarter one year prior, rising from $278.20 million to $479.70 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Pharmaceuticals industry and the overall market, Shire's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

You can view the full analysis from the report here: SHPG Ratings Report

For more, check out Paulson & Co.'s top 30 holdings here.

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