Paulson's Profit On Delphi May Top $400M

Nov 17 2011 | 1:02pm ET

Delphi Automotive's return to the public markets could not have come at a better time for one seriously downtrodden hedge fund manager.

Delphi, which filed for bankruptcy six years ago, went public this morning and promptly dropped below its offering price of $22. But that's no matter—or small matter—for Paulson & Co., which may have made more than $400 million on the deal.

The New York-based hedge fund, which has seen its main hedge funds lose double-digits this year, was to be the largest participant in the IPO, selling more than 80% of its shares in the company. But Paulson likely scooped up the convertible debt that became its stake in Delphi for pennies on the dollar; Bloomberg News estimates that Paulson and other investors who snapped up the debt paid an average of 67 cents per share, or $14 million for the $453 million in shares Paulson sold today.

If all of that is the case, Paulson today made back almost all of the money it lost on Sino-Forest Corp., the Chinese timber company whose stock plummeted in June after it was accused of overstating its timber holdings. Paulson had been Sino-Forest's largest shareholder.

Paulson still owns about 16% of Delphi, which is controlled by lenders including Elliott Management and Silver Point Capital.


In Depth

Virtu Celebrates Another Year Without a Single Day of Losses

Feb 26 2015 | 9:05am ET

High-frequency trading firm Virtu Financial Inc. reported another year without a...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Risk: How To Get In Front Of The Problem

Feb 26 2015 | 9:53am ET

In considering the topic of risk in the hedge fund world, specifically, the oversight...

 

Editor's Note