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

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of