Celebrated for his record payday in 2010,
has more recently been noted for the deterioration of his gold
fund, wherein he lost 28% in the first quarter. This followed
double-digit losses in his flagship funds, the Advantage Funds,
in 2011 and 2012. But GuruFocus'
Score Board of Gurus
suggests that the manager of the $18 billion hedge fund Paulson
& Co. may be enjoying the beginning of a turnaround. His
stock picks of the past six months have had the highest average
gain of all the gurus, at 399.4%.
Paulson is followed distantly by First Eagle Funds, whose picks
returned 110%, and
, whose stocks returned 106.6%.
All of Paulson's new buys of the third quarter have posted gains
from his average purchase price to date, save his smallest, a
0.052% portfolio position in Sibanye Gold Ltd. (
). His most profitable so far has been his 8.4% stake in MGIC
Investment Corporation (
). He purchased 17 million shares for $3.50 per share on average;
the price has since climbed 78% to $6.19 on Tuesday.
MGIC Investment Corporation is the parent company of Mortgage
Guarantee Insurance Corporation (
), a company offering mortgage insurance, risk management
products and services and structured finance services. It has a
market cap of almost $2.1 billion.
The company's stock rose sharply at the end of February when MGIC
announced that it had settled a dispute with Freddie Mac and had
made progress toward resolving a legal dispute with Countrywide.
The resolution, however, caused a spike in the company's losses
to $386.7 million, or $1.91 per share, from $135.3 million, or
$0.67 per share, in the fourth quarter of 2011. The loss included
$267.5 million related to the Freddie Mac settlement, and a $100
million increase in loss reserve estimates related to its
Countrywide Financial dispute.
Revenue declined to $371.4 million, compared to $447 million the
previous year. New insurance written rose to $7 billion, from
$4.2 billion, and delinquent loans fell to 13.9% from 16.1%.
In the first quarter of 2013, MGIC reported a net loss of $72.9
million, compared to $19.6 million the previous year. Revenues
were $269.2 million, compared to $379.7 million, and new
insurance written was $6.5 billion, up from $4.2 billion.
Delinquent loans declined to 10.91% from 12.83% the previous
MGIC Investment Corp's long-term price, revenue and net income
GuruFocus gives MGIC four severe warning signs: an Altman Z-score
of 0.37 which is in the distress zone signaling potential for
bankruptcy a Piotroski F-score of 1 which implies poor business
operations; per-share revenue in decline for the last five years;
and operating margin in long-term decline at an average rate of
16.5% in five years.
His highest-gaining stock of the fourth quarter was
Radian Group Inc. (
, which has climbed 87% on average since he purchased in the
fourth quarter at an average price of $4.70 per share. After
increasing his stake in the first quarter of 2013, Paulson owns
11.55 million shares, and the price has reached $12.96 on
Radian is another mortgage company. It insures and provides
financial services to mortgage lenders and financial institutions
under two segments - mortgage insurance and financial guaranty.
Radian carries a $2.24 billion market cap.
Six other gurus initiated positions in Radian in the first
quarter, including George Soros.
The company has been benefiting from higher mortgage demand,
writing 69% more new mortgage insurance business written year
over year in the first quarter. With only one quarter of positive
net earnings in the past year, Radian's CEO, S.A. Ibrahim said
management is "positioning Radian for a return to operating
profitability" due to strong new business volume, decreased
delinquency inventory and new business outweighing its legacy
mortgage insurance book.
GuruFocus warns that the company has an Altman Z-score of -0.03,
which is in the distress zone implying bankruptcy possibility in
the next two years. The company's per-share revenue has also
declined for the past five years.
As the company's price reaches a three-year high, Radian has a
P/B ratio of 2.34 which is close to a 10-year high and P/S of
2.50 which is close to a two-year high.
First Eagle Funds
First Eagle Funds, where legendary Jean-Marie Eveillard is senior
adviser and member of the board of the trustees after overseeing
funds for 30 years, has seen its picks of the last six months
gain 110.16%. In that time period, the firm bought 162 stocks.
The firm's top contributor was Vanda Pharmaceuticals Inc. (
), which has gained 249% from the $3.55 price paid on average in
the fourth quarter of 2012. The biopharmaceutical company's price
is $12.41 on Tuesday, and First Eagle holds 1,911,452 shares,
amassed since the fourth quarter of 2009.
Vanda's share price leapt in June on positive news for its
treatment for Non-24, a "serious, rare and chronic circadian
rhythm disorder that affects a majority of totally blind
individuals who lack light perception and cannot entrain
(synchronize) their master body clock to the 24-hour day," for
which there is currently no FDA-approved treatment. Results of a
study showed that the drug, tamiselteon, can entrain the
circadian clock, in Phase III studies.
Vanda's long-term price, revenue and net income history:
The new buys of Michael Price, of MFP Investors LLC, are shining
as well. Overall they have gained 106.6% on average over the past
Price's greatest new buy was Icahn Enterprises (
), of which he bought 175,000 shares at $62 per share on average
in the first quarter. The stock gained 29% from his purchase
price, trading for $79.52 Tuesday. It was his second largest new
purchase, behind Hess Corp. (
Icahn Enterprises is a holding company owned by fellow guru Carl
Icahn. The Peter Lynch chart shows that this stock is recently
In the first quarter, Icahn Enterprises registered $5.3 billion
in revenue in the first quarter of 2013, increased from $2.7
billion the previous year. Net income reported was $277 million,
or $2.50 per LP unit, compared to $49 million, of $0.48 per LP
unit the previous year.
Icahn spoke favorably of the effects of his brand of activist
investing in a company release: "Our performance this quarter in
particular and over the past decade in general, highlights the
fact that an activist strategy when properly implemented can
greatly enhance value for
See more of gurus' performance at the Score Board of Gurus.About
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