This Top Hedge Fund Manager Lost Over 5% in June

Two of Paulson & Co’s funds are down more than 5% in the first trading days of June, as big bets on Chinese timber companies and US banks (NYSE:XLF) have turned sour.

Paulson & Co owned about 35 million shares of Sino-Forest Corp., whose shares have declined 80% since late May, in the wake of accusations of improper accounting by a short seller.  Other big bets in Citigroup (NYSE:C), which is the firm’s third-largest holding, and Bank of America (NYSE:BAC), which was the firm’s sixth-largest holding, have also failed to generate gains.

  • Sino-Forest Corp.: The stock most recently traded at $3.22 and has traded in a 52-week range of $2.85 to $25.85.  Its market capitalization is $791.28 million, its trailing P/E is $2.02, and its trailing EPS is $1.60.  (These last two numbers are obviously suspect, due to the short sellers’ allegations.)  About the company: Sino-Forest Corporation is a commercial forest plantation operator in the People’s Republic of China.  As of December 31, 2009, Sino-Forest had approximately 512,700 hectares of forest plantations located primarily in southern and eastern China.  (Note that Sino-Forest Corp. trades on the Toronto Stock Exchange; all the numbers quoted about the stock are quoted in Canadian dollars.)
  • Citigroup:  The stock has most recently traded at $38 and has traded in a 52-week range of $36.20 to $51.50.  (The stock effected a 1-for-10 reverse stock split on May 9th, 2011.)  Its market capitalization is $110.98 billion, its trailing P/E ratio is 12.43, it earned $3.06 per share, and it pays a dividend of $0.04 per share.  Its forward P/E is 7.1, its PEG ratio is 0.55, its price to sales is 1.81, and its price to book is 0.65.   The bank has $783 billion in cash on its balance sheet, against $703 billion in debt, and has a book value of $58.46 per share.  48 million shares are sold short, equal to 1.4% of its float, and as compared to 42 million shares sold short the previous month.  About the company: Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers around the world. The Company’s services include investment banking, retail brokerage, corporate banking, and cash management products and services. Competitors to Watch: Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB), JPMorgan Chase (NYSE:JPM), HSBC (NYSE:HBC), Metlife (NYSE:MET), PNC (NYSE:PNC), U.S. Bancorp (NYSE:USB), Financials (NYSE:XLF) and Wells Fargo & Company (NYSE:WFC).
  • Bank of America: The stock most recently traded at $10.50 and has traded in a 52-week range of $10.41 to $16.10.  Its market capitalization is $106.4 billion, it lost $0.47 per share last year, and it pays a dividend of $0.04 per share.  Its forward P/E is 6.18, its PEG ratio is 1.26, its price to sales ratio is 1.29, and its price to book ratio is 0.5.  The bank has $629 billion in cash on its balance sheet, against $806 billion in debt, and has a book value of $21.15 per share.  100 million shares are sold short, representing 0.9% of its float, and which compares to 87.7 million shares sold short in the previous month.

Finally, it is not clear whether Paulson & Co. still holds onto these shares, as the most recent disclosures his funds have filed with the SEC covered Q1 11.  Reports about declines in June are attributed to investors briefed on performance, about which more detail can be found here.

(Note: Selected financial data are sourced from Yahoo! Finance.  All data are assumed to be accurate.)

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