Paulson Losing Money on U.S. Banks, AngloGold (AU) Stock Not Meeting Performance; Sees 18 - 24 Month Housing Recovery
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What's John Paulson saying about the economy? And what's he investing in? Why wait until August to find out?
Speaking with Paulson & Co. investors on a call last week, Paulson said he is a little bullish on the economy, with a few spats mixed in for good measure.
He sees equity risk premium at all classes right now, but believes equities should benefit from relative value. Paulson said he expects global GDP growth to be 4 to 4.5 percent and sees ISM manufacturing continuing to expanding, as will capacity utilization.
On housing, Paulson doesn't see recovery for another 18 to 24 months. Transitions from delinquent to current mortgages continue to improve, despite being at historically high levels.
Though earnings in the S&P grew 30 percent quarter-over-quarter for the last several sessions, P/E still remains at historical lows, according to the fund manager.
Paulson's bank holdings have contributed 25 percent to underperformance, 20 percent from gold, 15 percent from Sino-Forest (OTCBB: SNOFF), 10 percent from Transocean (NYSE: RIG), and 10 percent from Hewlett-Packard (NYSE: HPQ). Paulson said he made money on short exposure to European banks, but lost on long American exposure. The manager remains concerned about regulatory environment, and what it will mean for banks like Citigroup (NYSE: C) and BofA (NYSE: BAC).
Gold miners are down despite prices being up 7 percent on the year. Near-term margin concerns and some labor cost concerns have weighed on prices lately, though Paulson is confident fundamentals will pull miners through in the long term. Specifically, AngloGold (NYSE: AU) is performing in-line with expectations, but share performance is not. Paulson believes the market isn't accounting for AngloGold's margin after rolling off their hedges, which will leave them completely exposed to gold at $1500 per ounce.
On Transocean, Paulson believes earnings will top 2008 highs over the next two years. He suggested the company needs to bury the Macondo liability hatchet. Paulson sees the stock trading at $109 to $153 in FY12 and FY13.
H-P fundamentals are improving, but short term issues, including management, still linger.
Sino-Forest played itself out enough, Paulson exited that position.
The majority of his portfolio is in large cap equities. 60 percent is invested in the U.S., 30 percent in Europe, and the rest is elsewhere.
Paulson sees banks beginning to lend following the end of QE2.
Speaking with Paulson & Co. investors on a call last week, Paulson said he is a little bullish on the economy, with a few spats mixed in for good measure.
He sees equity risk premium at all classes right now, but believes equities should benefit from relative value. Paulson said he expects global GDP growth to be 4 to 4.5 percent and sees ISM manufacturing continuing to expanding, as will capacity utilization.
On housing, Paulson doesn't see recovery for another 18 to 24 months. Transitions from delinquent to current mortgages continue to improve, despite being at historically high levels.
Though earnings in the S&P grew 30 percent quarter-over-quarter for the last several sessions, P/E still remains at historical lows, according to the fund manager.
Paulson's bank holdings have contributed 25 percent to underperformance, 20 percent from gold, 15 percent from Sino-Forest (OTCBB: SNOFF), 10 percent from Transocean (NYSE: RIG), and 10 percent from Hewlett-Packard (NYSE: HPQ). Paulson said he made money on short exposure to European banks, but lost on long American exposure. The manager remains concerned about regulatory environment, and what it will mean for banks like Citigroup (NYSE: C) and BofA (NYSE: BAC).
Gold miners are down despite prices being up 7 percent on the year. Near-term margin concerns and some labor cost concerns have weighed on prices lately, though Paulson is confident fundamentals will pull miners through in the long term. Specifically, AngloGold (NYSE: AU) is performing in-line with expectations, but share performance is not. Paulson believes the market isn't accounting for AngloGold's margin after rolling off their hedges, which will leave them completely exposed to gold at $1500 per ounce.
On Transocean, Paulson believes earnings will top 2008 highs over the next two years. He suggested the company needs to bury the Macondo liability hatchet. Paulson sees the stock trading at $109 to $153 in FY12 and FY13.
H-P fundamentals are improving, but short term issues, including management, still linger.
Sino-Forest played itself out enough, Paulson exited that position.
The majority of his portfolio is in large cap equities. 60 percent is invested in the U.S., 30 percent in Europe, and the rest is elsewhere.
Paulson sees banks beginning to lend following the end of QE2.
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